Ceylon Chamber welcomes Monetary Board measures

Tuesday, 30 September 2014 01:48 - - {{hitsCtrl.values.hits}}

Expresses confidence 1H growth momentum can be maintained in 2H to achieve year-end target

The Ceylon Chamber of Commerce in a statement yesterday said it was pleased to note that the indicators highlighted in the Monetary Policy Review released by the Central Bank of Sri Lanka show continuous improvement in the macro economic performance of the country. “GDP growth data for the second quarter of 2014 at 7.8% shows an improvement over the 6.8% for the second quarter of last year with higher growth in agriculture and manufacturing. The enhancement in agriculture growth despite the drought is commendable as this demonstrates that even though some sub-sectors were adversely affected by the drought, the performance of other sub-sectors has compensated for it. We are confident that the growth momentum of the first half could be maintained in the second half to achieve the year-end target,” it added. The Central Bank has also succeeded in maintaining inflation at low levels, notwithstanding the adverse externalities. Exports growth has continued and been complemented by net flows from trade in services and capital inflows, which has led to a healthy balance of payments position. Credit to the private sector is yet to see an improvement. To encourage the commercial banks to lend to the private sector, the Central Bank has introduced some restraining measures on commercial banks placing excess funds with the Central Bank’s Standard Deposit Facility (SDF) and a reduction in interest rates for further deposits with the SDF. This will have a twofold push on commercial banks to increase their lending portfolios to the private sector, through reduced rates and by enhanced promotion of lending options. “As the impact of pawning advances wades off and with these new measures we believe that there will be an improvement in credit growth,” the Ceylon Chamber said.

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