Sri Lanka’s private credit expands by Rs. 790 billion in 2024 says the Central Bank
The Morning: Sri Lanka’s credit to the private sector expanded by Rs. 790 billion in 2024 with the majority of the expansion coming in the second half of the year due to increased economic activity, according to the Central Bank of Sri Lanka (CBSL).
Speaking at the monetary policy press briefing, Central Bank Governor Dr. Nandalal Weerasinghe said that the credit growth trend seen in 2024 enabled the economy to grow about 5%, which confirms economic recovery and increased economic activity.
He said that private credit growth, imports and current account deficit are all indicators of whether aggregate demand will be higher than the potential capacity or growth.
“Forward-looking aggregate aggregate demand is going to pick up more than the capacity of the country,” Weerasinghe said.
Credit to the private sector expanded to Rs. 790 billion in 2024 after recording an expansion of Rs. 146 billion in the first half of the year, private credit expanded by Rs. 359.4 billion alone in the last quarter of 2024 after December saw a private credit expansion of Rs. 193.2 billion.
The monetary policy statement said that private credit growth continues to accelerate supported by lower market lending interest rates and reflecting the recovery in economic activity, and it added that the expansionary momentum of credit to the private sector is expected to persist.
Weerasinghe said that December credit growth is purely due to seasonal factors which is usually seen in other years as well.
OSL take:
Sri Lanka’s economy has witnessed increased activities related to key economic sectors in the country that has in-turn resulted in the overall economic expansion. The economic expansion following the economic crisis faced by Sri Lanka in 2022 is indicative of the resilience, strength and growth of the country’s economy. These serve to boost the confidence among foreign businesses/investors to explore the growing business/investment opportunities in Sri Lanka. The private credit expansion recorded by the CBSL indicates the growth and expansion of the country’s private sector as well as the strength of the banking industry. A strong banking network is a prerequisite to a country working towards becoming a regional hub. Given all these, Sri Lanka, supported by its geographical positioning in the Indian Ocean and the strong trade ties enjoyed with many foreign countries, presents an ideal business/investment destination for foreign businesses/investors on the lookout for lucrative ventures in the South Asian region. Foreign businesses could also look at forming partnerships or joint ventures with local businesses on the expansion path to further assist in local and international expansions.
Article Code : | VBS/AT/20250205/Z_1 |