Here We Go Again

Central Bank says non-bank private sector has capacity to absorb nearly Rs.100 billion in extra borrowings but warned any such move will push interest rates up.

The UNF government announced in its last budget its net borrowing for the year would be Rs. 65 billion but the Central Bank says they can borrow up to Rs. 30 bn more from the non-bank private sector.rn

rnBut the Public Debt Department of the bank said resorting to the non-bank private sector, which includes the captive funds, would push up interest rates.rn

rnldblquote If the government wants to borrow, there are resources available up to Rs. 95 billion. Of course increased borrowing, even from the non-banking private sector, will cause pressure on the interest rates,
dblquote D.D. Dheerasinghe, Superintendent of Public Debt,Central Bank told LBR.rn

rnldblquote But it will be worse if the borrowing will recourse to the banking sector which I hope will not happen,
dblquote he said.rn

rnThe non-bank private sector is made up of the s