The Central Bank left its key short-term rates unchanged on Thursday, but cautioned that a higher than estimated budget deficit, from 6.8 per cent to 7.3 per cent of GDP could pressure the governments borrowing programme.
The overnight repurchase rate (repo rate) was kept at 7.00 percent and the reverse repurchase rate (reverse repo) at 8.50 percent, the bank said in a statement following its monthly Monetary Policy Meeting late Thursday. rn
rnThe bank has maintained its soft interest bias since the political crisis blew up on November 04, 2003 and has met market players many times, to assure them that there would not be a change in its policy of lowering interest rates. rn
rnHowever, the former Finance Minister announced earlier this year that the government-borrowing programme would shoot up by Rs. 22 bn to Rs. 87 bn this year due to revenue shortfalls and additional expenditure.rn
rnThe UNF governments spending programme came under strain when the President pulled out three key Ministries in N