New credit guarantee scheme on pawning advances: CB
View(s):The Monetary Board of the Central Bank (CB) has granted approval for a new credit guarantee scheme on pawning advances on behalf of the government.
The decision was taken at the board’s meeting on Monday ‘in order to counter the effect of the continued decline in pawning advances on productive sectors of the economy’, the CB said adding that the bank expected commercial banks to pass the ‘benefit of the eased monetary policy stance to borrowers without further delay’.
At the same meeting it was decided to maintain the policy interest rates of the CB – SDFR and the SLFR – unchanged at their current levels of 6.50 per cent and 8 per cent, respectively.
The statement, dealing with macro aspects of monetary policy, said that benign inflation and favourable inflation outlook, which were the key contributory factors in enabling the maintenance of the current monetary policy stance, continue to remain favourable.
In April, year-on-year (y-o-y) headline inflation was 4.9 per cent, which was well within the desired range, while y-o-y core inflation remained unchanged at 3.4 per cent.
Inflation is projected to remain benign in the months ahead, supported by favourable expectations although weather related supply disruptions could cause some marginal variation in the behaviour of certain food items, it said.
In the external sector, the trade deficit contracted by nearly 12 per cent for the first quarter 2014 boosted by high export trade volumes recorded in March 2014. Export earnings in March surpassed US$1 billion recording a significant 28.6 per cent growth (y-o-y). Further, the outlook for export earnings remains positive on account of the firming up of the recovery in advanced economies. A modest increase in expenditure on imports was also observed in March due to increased intermediate and consumer goods imports ahead of the April festive season.
“Inflows on account of workers’ remittances recorded a significant increase in March while earnings from tourism also continued to increase during the first four months of 2014 surpassing the half million mark in tourist arrivals by April 2014.
As at end March 2014, gross official reserves were at $8.1 billion, equivalent to 5.5 months of imports. Since then, the level of reserves has increased further with the inflows from the proceeds of the seventh international sovereign bond issued in April 2014,” the CB said.