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Sri Lanka private credit plunge in December, state credit soars
26 Feb, 2013 10:08:46
Feb 26, 2012 (LBO) - Loans from commercial banks to private borrowers fell to 9.9 billion rupees in December 2012 from 24.1 billion rupees a month earlier while credit to the state soared by 76.1 billion rupees, official data shows.
Credit to private borrowers grew to 2,358.4 billion rupees in December 2012 up 17.6 percent from a year earlier.

Rupee denominated credit to the state from banks rose 44.7 billion rupees to 634 billion rupees during the month of December, rising 34.1 percent from a year earlier.

Dollar debt narrowed to 132.4 billion rupees from 135.6 billion rupees a month earlier, and was up 35 percent from a year earlier. The exchange rate strengthened in December.

Credit to state enterprises rose 31.4 billion rupees to 292.5 billion rupees in December 2012, up 47.3 percent from a year earlier.

Central Bank credit to the government however fell 51 billion rupees to 278.8 billion rupees helped by a profit transfer off-set against previous credit extended. A contraction in central bank credit helps build foreign reserves and strengthens the exchange rate.

Total credit to the state and private borrowers after the reduction in central bank credit was 31.5 billion rupees in December down from 42.9 billion rupees in November.

Credit to state enterprises from commercial banks rose 94 billion rupees during the year.

State-run Ceylon Petroleum Corporation said it had lost 89 billion rupees last year. But it raised diesel prices and is expected to raise subsidized furnace oil to Ceylon Electricity Board in April. Power prices are also expected to be adjusted.

In February the government raised 153 million dollars from a floating rate dollar bond sold mainly to domestic banks and other buyers. Earlier rupee securities were sold to foreign buyers.

A fall in imports, especially vehicles have reduced revenues to the state. Tax spenders have also risen with around 50,000 unemployable graduates being given state employment recently.

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