Sri Lanka credit growth not alarming: CB Governor

Mar 28, 2011 (LBO) – Sri Lanka’s 28.1 percent credit growth in the 12 months to January 2011 “is not alarming” because it is growing from a low base following a credit crunch two years ago, but the trend is being watched, Central Bank governor Nivard Cabraal said. In 2009, Sri Lanka’s credit contracted and started to grow only in 2010.

“It is taking up the slack,” Governor Cabraal said. “Because it is growing from a low base it is not alarming.”

Credit to private business from commercial banks rose 28.1 percent to 1,530 billion rupees. Bank rupee loan books rose 30.1 percent to 1,364.7 billion rupees.

Sri Lanka’s inflation rose 7.8 in February 2011 from a year earlier, raising concerns. But the Central bank has said that it is expecting food prices in particular to ease in April and May after the effects of a flood in January recedes.

Rupee bank credit to government fell from 417.9 billion rupees in December to 380.5 billion in January while dollars loans were steady at 132 billion rupees.

Cabraal said the government had repaid maturing bank debt.

A spike in central bank credit to government to 91.5 billion rupees came from an interest free “provisional advance” of Central Bank credit.

Cabraal said the monetary authority steri