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Tuesday, 13 September 2011 00:39 - - {{hitsCtrl.values.hits}}
Credit boom to private sector continues unabated with the amount extended in the first half topping Rs. 200 billion and the end June cumulative figure surpassing the Rs. 1.7 trillion mark.
The estimated Rs. 209 billion lent in 2011 first half nearly three times the amount disbursed between end December 2009 and June 2010 worth Rs. 73 billion.
In comparison to end the 2010 figure of Rs. 1,495 billion; the June 2011 amount reflects a 14% increase whilst year on year (YoY), the growth was a high 34.4%. Since early this year YoY percentage growth has been at high 30s after credit to private sector slumped by nearly 6% in 2009 and picked up to 25% in 2010.
The Central Bank admits that end June 2011 credit growth to private sector was “higher than originally estimated,” but is of the view that it partly compensated the lower credit utilisation in the early months of last year. The IMF on Wednesday urged for curbing of high credit growth as well.
Low interest rate regime and rebound in economy and markets post-war have encouraged private sector borrowing.
Though base is low, credit to corporations is growing high as well with 38% increase YoY in June 2011 and up from 20% in May. Value wise cumulative figure was Rs. 150 billion, up from Rs. 108 billion a year earlier and Rs. 141.5 billion as at end 2010.
Despite fears of double-dip recession globally the Government is sticking to its forecast of 8% growth for 2011. In the first quarter GDP grew by 7.9%.
With preparations for 2012 Budget underway, the Government is also forecasting a similar 8% growth for next year. Some analysts claimed that though most global economies are stagnant or growing at slower pace, Sri Lanka remains unique as it was benefitting from the end of the war phenomenon.
They point to 35% increase in exports in 2011 first half and 46% growth in imports whilst earnings from tourism were up 51% to $ 370 million. This is in addition to worker remittances growing by 26% to $ 2.5 billion. Foreign direct investment (FDI) inflows in the first half had amounted to $ 413 million with the Government confident of achieving the $ 1 billion target by year end.
The gross official reserves (without Asian Clearing Union balances) rose $ 8.1 billion by 16 August 2011 from $ 6.6 billion recorded at end December 2010.
However other analysts opined that in recent months some of key economic sectors including tourism were losing steam and the effect of global crisis would be reflected in future data.