Nov 21, 2011 (LBO) – Credit to private business from Sri Lanka’s commercial banks rose 34.4 percent in the year to September marginally up from 34.1 percent in August with banks disbursing 53.8 billion rupees during the month, official data showed. Meanwhile central bank credit the rocketed 66.9 billion rupees, overtaking private sector credit in the month, central bank data showed.
Analysts had earlier warned that central bank credit would overtake private business as a key driver as the monetary authority bought domestic assets to offset reserve losses (sterilized intervention) due to peg defence and state loan settlements.
Net foreign assets of the central bank fell about 95 billion rupees (equivalent of about 860 million dollars) during the month, data showed. Reserves can also change due to valuation effects.
Peg defence and sterilization was high in September and had reduced in the following two months, according to other central bank data.
Central Bank credit to government rose 62.4 percent in September 2011 accelerating from a negative 16 percent in August.
Total credit to government rose at a slower 14.9 percent in September to 796 bil