Historically low interest rates have boosted private sector borrowings from banks to Rs. 414 billion in the first half, reflecting a 13% growth, the Central Bank said yesterday.

This figure is already higher than full year borrowings in 2020 (Rs. 374 billion) and 2019 (Rs. 235 billion).

“The momentum of credit expansion is expected to continue in the period ahead, with increased credit flows to productive and needy sectors of the economy,” the Central Bank said, though it yesterday announced new measures that will result in a rate increase. (See separate story)

It said credit obtained by the public sector from the banking system, particularly net credit to the Government, also increased notably year-to-date amidst the impact of the pandemic on Government revenue and recurrent expenditure.

Credit to State-owned Business entities amounted to Rs. 130 billion in the first half as against Rs. 184 in the entirety of 2020. Net claims on Government in the first half of 2021 was Rs. 647 billion as against Rs. 1.7 billion in 2020.

“Reflecting the impact of increased domestic credit, the growth of broad money (M2b) continued to remain elevated,” the Central Bank said. 

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