• Absolute private credit still high at Rs.58 mn in September, Rs.516 bn for 9 months
• Credit to public corporations up Rs.10 bn in September, but negative growth in 9 months  
• CB gives thumbs up to budget 2017 

From left: Central Bank Governor Dr. Indrajit Coomaraswamy and Assistant Governor, Mahinda Siriwardana
Pic by Damith Wickramasinghe

Sees adequate monetary space for economy to grow at 5.0% in 2016 and 6.3% in 2017
The Central Bank yesterday left its key policy rates unchanged for the fourth consecutive month in November as private sector growth showed some deceleration on a Year-on-Year (YoY) basis and inflation remained benign at mid-single digit levels. 
The decision to hold rates also demonstrated Central Bank’s optimism over the improving fiscal conditions, particularly the budget for 2017 showing strong commitment towards fiscal consolidation. 
However, the credit to the state and the public corporations increased while the overall money supply on the economy also accelerated to 18.4 percent YoY in September from 17.3 percent a month ago. 
In September, the private sector credit grew 25.6 percent YoY, slowing little from 27.3 percent YoY in August.  The authorities remain confident of further moderation in the credit growth as provisional data for October already showing a further deceleration. 
As a result, the Monetary Board decided to maintain its Standing Deposit Facility Rate (SDFR), the rate at which the Central Bank absorbs excess liquidity, at 7.0 percent and, the Standing Lending Facility Rate (SLFR), the rate at which the money is injected into the system, at 8.50 percent.  
The banks’ mandatory reserve ratio was also left unchanged at 7.50 percent since it was raised by 150 basis points in January.
Despite a slowdown in credit flowing to the economy on a YoY basis, on absolute terms, the banking system granted Rs.58.4 billion in credit, increasing from Rs.45 billion in August. But a confident Central Bank expects the credit growth to fall below 20 percent by the end of 
this year. 
 “Our models are showing that by the end of the year private sector credit growth will come down below 20 percent. So, we are reasonably confident that’s on track. There are certain base effects also which are favourable in the last couple of months of the year. So, we are fairly confident on that,” Central Bank Governor, Dr. Indrajit Coomaraswamy told the media in Colombo, yesterday. 
In the meantime, during the nine months to September, the total private credit granted has peaked to Rs.516 billion from Rs.398 billion recorded during the same period 
last year. 
Credit to the agriculture sector showed a YoY growth during the third quarter while the industry and services sectors showed a decline 
in credit.