State, private sector credit expands by Rs. 96.6 Bn in Nov.
Both State and private sector credit expanded for the 7th consecutive month by Rs. 96.6 billion in November 2024 -24, First Capital in their Monthly Economic Watch report said.
State credit also registered an uptick of Rs 150 billion for the month of November 24, deviating from the downward trajectory seen since the start of 2024. The report also says that Inflation is set to return to positive territory toward mid-2025.
“It was stated that the CBSL would focus on maintaining inflation around the target rate of 5%.”
Month on Month inflation rose by 1.2% while MoM with the Food group saw it rising to 3.9% MoM while that of the Nonfood group dipped to -0.1% MoM. The YoY figure stood at -1.7% in December 2024, up from -2.1% registered in the previous month. YoY inflation of the food group rose marginally to 0.8%. Inflation of the Non-Food group also rose to -3.0% in December from -3.3% in November 2024. The performance of the Non-food component was primarily triggered by price decreases in housing, water, electricity, gas and other fuels and transport among other sub-items.
The Central Bank aims to revamp the existing Statutory Reserve Requirement (SRR) and transition to a more market-friendly Open Market Operations (OMO) process.
CBSL would remain committed to maintaining Sri Lanka’s current account surplus at sustainable levels through the medium term. It was also highlighted that the Central Bank would continue purchasing foreign currency from the market in order to further improve external buffers.
The bank recapitalization efforts are set to be further strengthened in line with the roadmap for restructuring and recapitalizing 9 large domestic banks.
“Moreover, the Central Bank, with the coordination of the Colombo Port City Economic Commission will facilitate the conduct of offshore banking business through regulatory and supervisory functions.”
Commenting on the digitization process the report says that a three year comprehensive plan will be developed to improve the digital payment infrastructure of the country’s financial system and added efforts will be in place to foster financial inclusion in the economy.
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