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The Central Bank has cut its domestic borrowing programme for Nov. by Rs. 2 bn, as the Treasury is expecting some dollar funds to come in.
The bank was earlier planning to raise Rs. 2 bn through a four-year issue on Thursday, with settlement on Nov. 17.rn

rnldblquote The Treasury has informed us that around US$ 50 mn is expected from the Asian Development Bank this month,
dblquote Central Banks Public Debt Dept. Superintendent, Dharma Dheerasinghe told Lanka Business Online.rn

rnThe ADB tranche, forms part of an expected programme loan for private sector development, he said.rn

rnThe Treasury was planning to borrow Rs. 29.5 bn in the market this month, of which Rs. 22 bn was through re-issues of Treasury Bills and Rs. 7.5 bn in Treasury Bonds.rn

rnSo far, the bank has raised Rs. 3.5 bn through treasury bonds. A further Rs. 4 bn is expected to be raised through 10 and 15-year bond issues this month. But Dheerasinghe says, the Treasury has not indicated if the issue is to be called off.rn

rnIf the issue is called off, the governments borrowing programme would then be reduced to Rs. 25.5 bn.rn

rnThe announcement comes, after the bank left its key short-term rates unchanged on Tuesday, signalling that it was lquote business as usual on the interest rate front.rn

rnThe overnight repurchase rate (repo rate) was kept at 7.0 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 Monday. rn

rnThe bank said growth targets are on track, with trends in macroeconomic indicators signalling an ongoing economic recovery. rn

rnldblquote Output in the agriculture and industrial sector continue to grow. Inflation and inflationary expectations have fallen further. The external sector continues to perform well. Money supply and private sector credit are gradually picking up. Markets are continuing to adjust to the last revision in the Central Banks policy rates,
dblquote the statement said. rn

rnThe bond market was divided late Monday, whether the bank should lower its rates, considering the current political impasse. rn

rnThe bank has maintained it soft interest bias right throughout the crisis and has met market players to assure them that there would not be a change in its borrowing programme. rn


-Mel Gunasekera: melg@vanguardlanka.comrn