Private sector set to recover in 2010
Ramani KANGARAARACHCHI
|
Ajith Nivad Cabraal |
The private sector is expected to make a substantial recovery in 2010
and the major source of the expansion of net domestic assets (NDA) will
be the increase in credit to the private sector, Central Bank Governor
Ajith Nivad Cabraal said. Speaking at the Central Bank Conference Hall
presenting the Monetary and Financial Sector Policies for 2010 recently,
he said the growth in credit to the private sector is expected to return
to positive territory by the second quarter of 2010.
“It is expected to increase, a year on year growth of around 13
percent by end December. However fiscal consolidation efforts will have
to be continued and any reckless new public spending in hundreds of
billions on recurrent expenditure will have adverse effects on the
economy,” the Governor said.
Cabraal said an improved performance in public Corporations is also
anticipated this year. An improvement in the financial operations of
major public Corporations including the Ceylon Petroleum Corporation and
the Ceylon Electricity board is expected.
The performance of public corporations would depend to some extent,
on the price of crude oil and fertilizer in the international markets.
He said the credit utilization by the main corporations, similar to
credit to the Government, would impact on the credit from the banking
system available to the private sector, unless these entities arrange
part of their financing from outside sources. That is an option they
should consider.
However, the public sector will need to function in line with
stipulated norms and it is essential that the 2010, budget should give
due priority to critical areas and ensures that borrowing from the
banking system does not exceed the stipulated levels. |
