State owned enterprises continue to rely on debt, 2020 borrowings exceed Rs 180 billion

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The Central Bank Annual Report which was released recently, showed that there was a stronger credit demand by State-owned Enterprises (SOEs) resulting in a  total state sector borrowing of a whopping Rs 184.2 billion in 2020. (roughly USD 1 billion using 2020 avg exchange rate).

Credit given out  to State-owned Business Enterprises (SOBEs), witnessed an expansion in the year 2020 .However this was likely due to the weakened financial position of SOBEs caused by the pandemic situation.

The following was also revealed in the report:

  • Credit extended to the private sector recorded a growth of 6.5%, year-on-year, by end 2020. This resulted in a rise of Rs. 374.1 billion during the year.
  • credit obtained by SOBEs from the banking system increased by Rs. 184.2 billion during 2020.
  • bank borrowing by the Road Development Authority (RDA) increased by Rs. 53.6 billion during 2020. 
  • bank borrowing by the Ceylon Petroleum Corporation (CPC) in foreign currency increased by around Rs. 74 billion
  • Credit obtained by the following institutions increased: 
  • Ceylon Electricity Board (CEB) 
  • SriLankan Airlines, 
  • National Water Supply & Drainage Board (NWSDB)
  • Paddy Marketing Board (PMB)   
  • State Pharmaceuticals Corporation (SPC)
  • credit extended to the Services sector declined from 3.1% at end 2019 to 1.4% year-on-year by end 2020.
  • growth of credit to the Financial and Business Services subsector contracted by 5.5% year-on-year by end 2020, compared to the contraction of 6.5% at end 2019
  • credit to the Tourism sub sector expanded by end 2020, following concessional loan schemes given to support the tourism sector.
  • growth of credit to the Industry sector accelerated from 3.1% ( end 2019) to 4.7% year-on-year (by end 2020).
  • The construction sub-sector was affected significantly.Credit to the Construction subsector, recorded a notable growth of 12.6% year-on-year by end 2020.
  •  increase in Personal Loans and Advances contributed around 58% to the expansion of credit extended to the private sector during 2020, 
  • increase in credit to different sectors was recorded as follows:
  • Industry (31%)
  • Services (6%)
  • Agriculture and Fishing (5%)

Source CBSL

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