Credit to GoSL, Corporations overtake Pvt. sector

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 Rupee equivalent or domestic credit extended by Sri Lanka’s banking and monetary sectors, to the Government of Sri Lanka (GoSL) and to public corporations, continued to overshadow credit given to the private sector for the twelfth consecutive month to July 2022, a phenomenon last seen 39 years ago in July 1983, Central Bank of Sri Lanka (CBSL) data of Friday (9) showed. The private sector and not the GoSL and its agents (public corporations), is considered as being the engine of growth.

While domestic rupee equivalent credit extended to the private sector by the domestic and offshore banking sector was Rs 7,631.1 billion, such credit extended to the Government of Sri Lanka (GoSL) and to its agents such as State corporations increased by Rs 907.3 billion at Rs 8,580.4 billion in the month of July, data showed.

Previously, such a phenomenon, where rupee equivalent credit extended by the monetary authorities and the domestic and offshore banking sector, to GoSL and its agents being greater than such credit extended to the domestic private sector, occurring for at least 12 consecutive months or more, took place for a total of 31 consecutive months during the period January 1981 to July 1983, records showed.

In the present era, domestic credit to the GoSL together with public corporations accelerated by 8.24 per cent (Rs 692.5 billion) to Rs 8,406.4 billion in June 2022; while credit to the private sector lagged behind at Rs 7,713.9 billion, showing that the gap between credit to GoSL and to its corporations vis-a-vis credit to the private sector amounted to Rs 692.5 billion in June 2022, CBSL’s Friday’s data showed.

In related developments, in the previous month May 2022, domestic credit to the GoSL together with public corporations relative to the acceleration seen in June 2022 decelerated by six per cent (Rs 494.7 billion) to Rs 8,249.1 billion in May 2022, with credit to the private sector lagging behind at Rs 7,754.5 billion, showing that the gap between credit to GoSL and to its corporations vis-a-vis credit to the private sector amounted to Rs 494.7 billion in May 2022.

In like developments in April 2022, credit to the GoSL and to public corporations in total amounted to Rs 8,273.5 billion, while credit to the private sector amounted to Rs 7,752.5 billion, showing a gap between credit to GoSL and to its corporations vis-a-vis credit to the private sector, of Rs 520.6 billion.

And, in March 2022, credit to the GoSL and to public corporations in total amounted to  Rs 8,090.7 billion; while credit to the private sector amounted to Rs 7,529 billion, showing a gap between credit to GoSL and to its corporations vis-a-vis credit to the private sector,  of Rs 561.7 billion.

In  similar developments, in February 2022, the comparative figures of credit to GoSL and its allied corporations amounted to Rs 7,331 billion, while credit to the private sector amounted to a mere Rs 7,051 billion that month, the former being more by Rs 280 billion over the latter.

And in the previous month January 2022, credit to the GoSL and to public corporations amounted to Rs 7,236 billion, while credit to the private sector amounted to a mere Rs 7,017 billion that month, the former being more by Rs 219 billion over the latter.

Meanwhile, in December 2021, credit to the GoSL and to public corporations amounted to Rs 7,467.9 billion, while credit to the private sector amounted to a mere Rs 6,981.4 billion, the former being more by Rs 486.5 billion over the latter. In November 2021, credit to the GoSL and to public corporations amounted to Rs 7,259 billion and credit to the private sector Rs 6,920.1 billion, an increase of Rs 338.9 billion.

Similarly, in the months of October, September and August 2021 these respective figures were Rs 7,116.8 billion and Rs 6,859.6 billion; Rs 6,915.2 billion and Rs 6,824.6 billion and Rs 6,819 billion and Rs 6,795.5 billion, increases of Rs 257.2 billion, Rs 90.6 billion and Rs 23.5 billion, respectively.

By Paneetha Ameresekere