(Updates with particulars, background)
MUMBAI, March four (Reuters) – Sri Lanka’s central financial institution left its key rates of interest unchanged on Thursday and re-affirmed its dedication to keep up a low rate of interest construction till the financial system reveals indicators of a sustained restoration.
It stated the financial board famous the current slowdown in credit score disbursements to the personal sector and insufficient lending to productive sectors of the financial system.
It pressured the necessity for the monetary system to lend to productive sectors as a way to help the continued restoration of home manufacturing.
The Central Financial institution of Sri Lanka (CBSL) stored the standing deposit facility charge and the standing lending facility charge at four.50% and 5.50%, respectively. The statutory reserve ratio was additionally left unchanged at 2%.
The central financial institution is carefully monitoring the commerce deficit, which narrowed by $2 billion in 2020 as a result of notable decline in imports and is predicted to stay compressed in 2021, the assertion stated.
In February, central financial institution chief W.D. Lakshman stated Sri Lanka’s present account deficit fell to about $1 billion to $1.2 billion in 2020 from about $1.eight billion in 2019 and stated a present account surplus was “real looking” this 12 months.
He had additionally stated the nation is dedicated to assembly its debt servicing obligations and is in talks with some overseas governments and multilateral establishments on its funds.
“Regardless of antagonistic hypothesis, all debt service obligations of the federal government have been duly met so far in 2021, and the federal government stays dedicated to sustaining its impeccable debt service file sooner or later as properly,” the financial institution’s assertion stated.
The central financial institution stated it expects inflation to stay subdued in 2021 as each headline and core inflation stays low because of weak demand and is predicted to remain within the focused four%-6% medium-term vary. (Further reporting by Sethuraman N R in Bengaluru; Enhancing by Tom Hogue and Sam Holmes)