Central bank of Sri Lanka to introduce lending targets

Source: Xinhua| 2020-11-26 19:20:08|Editor: huaxia

COLOMBO, Nov. 26 (Xinhua) -- The Central Bank of Sri Lanka will introduce lending targets to stimulate growth in sectors prioritized by government policy, the Central Bank of Sri Lanka (CBSL) said in a statement here on Thursday.

Following a meeting on Wednesday, the Monetary Board of the CBSL has "recognised the need to promote economic sectors with higher growth and earning potential, and in this regard, decided to introduce lending targets in the near future for selected sectors in conformity with the policies of the government."

The CBSL also stated that it would continue its accommodative monetary policy stance by maintaining the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) at 4.50 percent and 5.50 percent respectively.

"The Monetary Board urges all financial institutions, led by licensed commercial banks (LCBs), to pass on the benefit of the low-interest rate environment expeditiously to their borrowers, in respect of new as well as existing facilities," the statement said.

The CBSL has also decided to introduce a maximum interest rate for mortgage-backed housing loans taken by salaried workers.

The CBSL said that the country's external sector has stabilized with a narrowing of the trade deficit and an increase in worker remittances. The Sri Lankan rupee has depreciated two percent against the U.S. dollar this year.

The country's gross official reserves stood at 5.9 billion U.S. dollars by end October, enough to cover 4.2 months of imports. Headline inflation has remained within the CBSL's target range of between four to six percent.

Sri Lanka's economy saw a resurgence of economic activity in the third quarter until the onset of a second wave of COVID-19 in October. The CBSL expects growth to rebound in 2021 due to policies outlined in the government's budget. Enditem