Sri Lanka credit to business slows; dollar loans contract in Sept

Nov 26, 2012 (LBO) – Sri Lanka’s credit given to private business from banks commercial banks fell to 9.8 billion rupees in September 2012, the lowest since 2009, with dollar denominated loans contracting, though the rupee book was still growing, official data showed. Sri Lanka’s credit contracted in nominal terms during 2009, following the last balance of payments crisis triggered by sterilized foreign exchange sales by the Central Bank.

By end-September 2012 credit to private business rose 25.5 percent from a year earlier to 2,294.9 billion rupees, slowing from 28.7 percent a month earlier.

Credit from rupee books of banks rose 28.2 percent to 2,112.6 billion rupees from a year earlier with growing 29.30 billion rupees in new loans being given.

But dollar denominated loans contracted by the equivalent of 19.5 billion rupees to 182.3 billion rupees.

In September 2012 Sri Lanka’s rupee peg appreciated in the wake of slower credit and outright sales of central bank held treasury bills or sterilized foreign exchange purchases.

In that money central bank credit to government (printed money) fell to 345.4 billion rupees, from 355.4 billion a month earlier.

In October the Central Bank started to print money into banks again through term auct