Recent survey shows growing risk in Sri Lanka’s main cultivating regions
The survey which has been carried out based on 1,500 respondents in the NCP has found that the average household borrowings remain higher than the national average, and Polonnaruwa district carries the highest debt figure
Growing household debt is nothing new for both developed and emerging economies, and Central Banks globally have been grappling with the issue from time-to-time and have used interest rates and other macro-prudential measures to arrest the situation when it poses threats to their system’s financial stability.
The situation is no different in Sri Lanka as there was a sharp increase in household debt during the last 3 - years, a development which the Central Bank had to intervene to curtail the rapid increase in personal loans last year.
Each household in Sri Lanka is at least Rs.375,000 in debt by the end of 2016, a figure which has obviously gone up by now - from Rs.250,000 in 2014. Once the Central Bank Governor had to say it was time the bank, “put some sands in to the wheels to slow down a little bit because there is really a very sharp increase in personal loans”. That was the situation nationally but the fresh concerns appears to be propping up in the country’s NCP - a home to a large section of farming community engaged in paddy cultivation - as at least 3/4 of households have become indebted and worse, majority of them have obtained at least two loans on average.
The survey which has been carried out based on 1,500 respondents in the NCP has found that the average household borrowings remain higher than the national average, and Polonnaruwa district carries the highest debt figure.