Overdraft

Nov 29, 2013 (LBO) – Sri Lanka’s finance ministry had run an overdraft of 120.9 billion rupees at banks by September 2013 which was about 1.2 percent of gross domestic product, official data showed. Though the gap was higher than the 98.1 billion rupees deficit in September 2012 it was lower than 144.5 billion rupee deficit run up in January, a finance ministry report said.

Overdrafts are typically run at state banks.

Total inflows from revenue and other receipts up to September was 723 billion rupees, up from 702.9 billion a year earlier but much lower than an optimistic target of 895 billion rupees.

Cash outflows for recurrent expenses was 921.6 billion rupees, and for capital expenditure 370.4 billion rupees leaving a net cash deficit of 568.2 billion rupees.

Net borrowings were 604.9 billion rupees.

Depending on the method of financing of the net cash deficit determines whether Sri Lanka has economic stability or not.

If the net cash deficit is monetized by selling Treasury bills to the Central Bank or if the bank overdraft is re-finance through the reverse repo window high levels of inflation, currency depreciation, foreign reserve losses or a combination takes p