Policy Position

Mar 22, 2012 (LBO) – Central bank ‘moralsuasion’ on commercial banks in Sri Lanka may have to be strengthened if current credit demand prevails, Treasury secretary P B Jayasundera said. He said the monetary authorities will wait and watch how the economy responds to recent interest rate hikes and curbs on lending.

The economy is now facing seasonal demand with recent wag hikes and in the run-up to the April new year festive season, he said.

The central bank had earlier imposed limits on lending by banks in an effort to curb what was considered excessive credit growth which was also fuelling import demand.