• Expect surge in credit flow in final quarter of 2023 driven by seasonal demand
• Says focus is shifting towards repricing financial cost rather than acquiring more credit
• Encourages passing on benefits of relaxation to individuals and businesses

The Central Bank Governor Dr. Nandalal Weerasinghe forecasted a notable rise in private sector credit growth, commencing from the final quarter of 2023 boosted by the simultaneous relaxation of lending rates and an overall improvement in economic conditions.

“With seasonal demand, we could see further expansion in credit flow in November and December, setting the stage for a robust start to the upcoming year,” he told journalists yesterday.

Dr. Weerasinghe acknowledged a modest recovery in private sector credit growth thus far, expressing optimism for a more pronounced upturn as interest rates continue to descend.

He emphasised a shift in approach, noting; "The current trend is not merely to acquire more credit, but rather to recalibrate the financial cost. As lending rates decline further, we anticipate a surge in investments and consumption. This attests to the responsiveness of our monetary policy."

Dr. Weerasinghe underlined that this development is poised to curtail contraction and steer the economic trajectory towards a positive territory. 

He said the financial sector is encouraged to promptly and effectively transmit the advantages of the ongoing relaxation of monetary conditions to individuals and businesses particularly, those engaged in industries and SMEs. 

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