Credit to the State Inflates at Pvt. Sector Expense for 3rd Month

By Paneetha Ameresekere | Published: 2:00 AM Dec 6 2021
News Credit to the State  Inflates at Pvt. Sector Expense for 3rd Month

By Paneetha Ameresekere

Domestic credit extended by the country’s banking sector and Central Bank of Sri Lanka (CBSL) to the Government of Sri Lanka (GoSL) and  its agents exceeded credit extended by them to the private sector for the third consecutive month to October year-on-year (YoY), CBSL data of Friday’s (3) showed.

These developments have to be looked at in the context that the private sector is considered as the engine of growth.

This phenomenon last took place 384 months ago, i.e. from January 1989 to October 1989, a period where Sri Lanka was on fire due to the combined activities of the IPKF, LTTE and JVP.

Domestic credit extended by the banking sector and CBSL to the State and its agents (public corporations) over credit extended by them to the private sector in the three consecutive months to October 2021 has not  only been greater, but has also been growing, both in absolute and in percentage terms.

Meanwhile, domestic credit extended  by the banking sector and CBSL to the GoSL and public corporations (GoSL’s agents) in October 2021 was Rs 7,116.8 billion, whereas  domestic credit extended to the private sector that month was a mere Rs 6,859.7 billion, an increase of Rs 257.1 billion (3.77 per cent).

In the previous month September 2021, domestic credit extended by the banking sector to the GoSL and public corporations was Rs 6,915.2 billion, whereas credit extended by them to the private sector was only Rs 6,824.6 billion, an increase of Rs 90.4 billion (1.32 per cent). 

And in August 2021, domestic credit extended by the banking sector to the GoSL and public corporations was Rs 6,819 billion, whereas credit extended by them to the private sector was only Rs 6,795.5 billion, an increase of Rs 23.5 billion (0.35 per cent). 

By Paneetha Ameresekere | Published: 2:00 AM Dec 6 2021

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