Sri Lanka inflation slows to 5.8-pct in April
Apr 30, 2010 (LBO) – Consumer prices in Sri Lanka’s capital Colombo rose 5.8 percent in April 2010 from a year earlier, down from 6.3 percent in March, the second straight monthly fall, the government’s statistics office said.
In the month of April the Colombo consumer price index fell 1.0 percent in absolute terms to 212.6 points from 214.8 points a month earlier.
The slowing down of inflation came despite growing fears of inflationary pressures rising amid heavy government spending, debt monetization and excess liquidity.
“We have some of the highest policy rates,” Central Bank governor Nivard Cabraal said.
“But we are watching liquidity closely.”
Sri Lanka’s excess liquidity had come from monetization of debt further along the yield curve though the central bank has been mopping up the liquidity with high policy rates overnight.
Sri Lanka private banks mull small branches in former war zone
Apr 29, 2010 (LBO) – Sri Lanka’s Nations Trust Bank (NTB) is to use a ‘feeder branch’ network to expand in the former north-east war zone to
bring down operating costs, and wants donor agencies to subsidize credit risks, a senior official said.
“It is possible that we may look at smaller branches in the North and East,” Saliya Rajakaruna, chief executive of NTB told Lanka Business
Report (LBR) in a recent interview.
“Our configuration may have to change so we may have a structure where there are smaller feeder branches (linked) to the main ones.
“Cost per branch is now running at about 20 million, we would like to see it coming down to 12 to15 million.”
Sri Lanka’s ethnic war ended in May, 2010 resulting in an economic revival in the north and east.
Private banks are slowly setting up branches in the former conflict areas.
Rajakaruna, with 30 years experience at Citi Bank, London, was the head of finance of state owned Bank of Ceylon before joining NTB.
He said most private banks are rushing to the north-east expecting easy pickings, as traditionally default rates in the north have been low due to peer pressure from the community to payback debt.
Sri Lanka budget gap widens in January: data
Apr 29, 2010 (LBO) – Sri Lanka’s budget gap widened in January 2010 from a year earlier, with revenues rising modestly but unable to keep up with current spending, which accelerated almost three times faster, official data shows.
The government raised 48.3 billion rupees in revenues in January up 5.2 percent from 2009, but still below the 2008 level of 51.9 billion rupees.
Meanwhile current spending grew 15.1 percent to 94.4 billion rupees, just short of double the revenues, up from 82 billion rupees a year earlier.
In January Sri Lanka had presidential elections.
The government was left with a revenue deficit of 46.1 billion rupees, up from 36.1 billion rupees a year earlier.
In 2009 Sri Lanka’s revenues actually fell in nominal terms amid an economic slump, but this year though revenues are up, spending is growing faster.
The revenue deficit or the gap between total revenue and day-to-day expenses is now about 0.8 percent of gross domestic product, against a planned 1.9 percent for the full year indicated in a pro-forma budget published in a fiscal report in February.
Sri Lanka is now on an interim mini-budget or ‘vote on account’ which had authorised the government to spend 362.7 billion rupees, not counting interest payments, up to April 2010, until a new cabinet took over after parliamentary polls in April.
Officials have now said another three-month vote on account will be passed before a budget proper is made in June.
Sri Lanka also increased capital spending by 3.6 percent to 17.3 billion rupees pushing to the total budget deficit to 63.4 billion rupees in January.
The Treasury had received about 200 million rupees as grants, leaving it with a deficit of 63.2 billion rupees to be financed by borrowings.