Credit Trend

July 09, 2012 (LBO) – Credit to the state from Sri Lanka’s banking system eased in May 2012 and loans to business were back at levels seen before the Central Bank began to sterilize foreign exchange sales last year, official data show. Credit to private sector rose 36.1 billion rupees in May 2012 to 2,215 billion rupees, up 33.5 percent from a year earlier. Annual growth eased from 34 percent to 33.5 percent.

Credit to state enterprises grew 9.4 billion rupees to 266.6 billion rupees in May up 107.7 percent from a year earlier.

Credit to the central government fell 3.7 billion rupees to 1,024.8 billion rupees driven by a reduction in central bank credit (printed money) to the state by 22.2 billion rupees to 329.5 billion rupees.

Up to April budget were seen to deteriorate. The total state credit in May however, were at a nine month low.

In April tens of billions of rupee were printed to pay double salaries to state workers as state revenues fell amid a slowing economy and a trade contraction, but most of it was repaid in May.

But in April actual cash demand by the economy also goes up due a traditional festival.

The government however had borrowed 18.5 billion rupees from commercial banks in May, inclu