Sri Lanka banks should lend more to utilize new economic capacity: CB Governor

Feb 17, 2013 (LBO) - Sri Lanka's bank should lend more to businesses associated with ports, airports, health and information technology to make use of expanded capacity in the economy, Central Bank Governor Nivard Cabraal said. Sri Lanka's government has developed infrastructure in recent year with ports, airports and roads generating extra capacity and opportunities for business in the economy, he said.

"We need to concentrate a fair amount of investments into these areas," Cabraal said.
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"Then only capacity will be utilized. We want capacity to be utilized, so that the economy can grow without the risk of inflation.

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In a monetary policy statement released Monday, the Central Bank said it was keeping a policy corridor unchanged at 6.50 percent to drain excess money and 8.0 percent to inject liquidity.

But the decision making monetary board said it was "appropriate to further encourage the utilisation of this investment potential, since such policies by the government would give rise to increased and accelerated sustainable economic growth in the period ahead."

Cabraal said further monetary loosening was not envisaged at this time but "real economy" developments were needed, with support from the banki