Investor aversion to Pvt. Sector lending continues

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The decrease in Government of Sri Lanka’s (GoSL’s) at least theoretical money printing borrowing costs (MPBCs) accelerated for the second consecutive market day to Tuesday (16 August), with Tuesday’s fall being by 1.68 per cent (Rs 2,107.77 million) to Rs 123,450.29 million, led by continuous investor buying pressure for high yielding Treasury (T) Bills and T Bonds in secondary market trading, rather than lend to the private sector, the engine of growth.

GoSL’s face value (FV) MP debt declined for the second consecutive market day to Tuesday, with Tuesday’s decrease being by 0.78 per cent (Rs 24,777.75 million) to Rs 3,135,530 million (Rs 3.1355 trillion), thereby marginally defraying demand-pull inflationary pressure. GoSL’s FVMP debt has been over Rs 3 trillion for a record consecutive 28 market days to Tuesday due to a perennial lack of revenue. Also, GoSL’s highest to the 233rd highest FVMP debt has been registered for a record 233 market days to Tuesday.

Liquidity during trading was enhanced for the fourth consecutive day to Tuesday, with Tuesday’s increase being by Rs 43,960.75 million (US$ 121.83 million), led by the settlement of transactions between the GoSL and the Central Bank of Sri Lanka (CBSL). Conversions are based on the administered value of the benchmark ‘spot’ which was Rs 360.85 to the dollar on Friday (12 August).

By Paneetha Ameresekere