Credit expansion falls by half in 2ndQ 2012:CB
View(s):Efforts by the Central Bank and the Government earlier this year to rein in high demand for imports and credit are yielding results.
“Reflecting the impact of the policy measures taken, credit obtained by the private sector has decelerated since the second quarter of 2012, and the policy measures in place are expected to help ensure that the growth of credit will be within the desired level at year end,” the Central Bank said in a statement this week.
Average monthly credit decelerated to around Rs.27 billion during the period from April-July compared to the average monthly credit expansion of about Rs.52 billion in the first three months. The growth of broad money also eased to below 20 per cent in July for the first time this year. The Bank said that the amount of credit available has been sufficient to facilitate reasonably robust economic activity, and as per estimates of the Department of Census and Statistics, the economy recorded a growth of 7.2 per cent during the first half of the year. Inflation, which increased in June and July, largely due to domestic supply disruptions has eased somewhat, recording a year-on-year change of 9.5 per cent in August. “The downward revision of certain administratively determined prices, such as LP gas, and revisions to tariffs and levies on selected food items is expected to provide some respite from temporary increases in inflation arising from supply side shocks,” the Bank added.
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