Sri Lanka credit to business, state, strong in August

Oct 17, 2011 (LBO) – Credit to business from Sri Lnaka’s commercial banks rose 34.1 percent in August 2011 from a year earlier to 1,775.7 billion rupees, with loans of 50.9 billion made in the month, while state borrowings from the banking system also spiked. The annual credit growth was slightly higher than the 33.9 percent in July, according to Central Bank data. Data on credit to state enterprises and private business from foreign currency units of banks had been revised in August.

Deputy economic research director Swarna Gunaratne said a classification change of SriLankan Airlines from private sector to state ownership had resulted in the revision. The revision of was only about three to four billion rupees, she said.

The state borrowed 41.8 billion rupees from commercial banks in August, the highest monthly volume so far this year.

In July, state borrowings fell with the sale of a billion dollar bond and repayments of banks borrowings, though state enterprises.

Gunaratne said the state domestic borrowing increases may be temporary.

Analysts had warned that state borrowings from the domestic banking system on top of high credit growth is putting pr