February sees Rs.106bn in fresh credit

The provisional data from the Central Bank showed that the private sector credit was growing at a robust pace, picking up from December’s rapid rise, ahead of the festive season. 

This is as the manufacturers ramp up production while the traders stock up goods. According to the data, the total outstanding credit to the private sector had grown by Rs.106.0 billion in February 2025, after a seasonal decline of Rs.4.6 billion seen in January, following a bumper growth of Rs.193.2 billion seen in December 2024.

February marked a solid start to private sector credit by commercial banks in 2025, after the sector disbursed a whopping Rs.790.0 billion in fresh credit for the whole of 2024.

The February credit translated into a strong 12.8 percent increase in total outstanding private sector credit from a year ago.

Leaving its key policy rate unchanged at yesterday’s monetary policy announcement, the Central Bank said it expects the trend in private sector would persist, encouraging domestic economic activities.

The breakdown of the credit across different sectors also showed mostly double-digit credit growth across agriculture, industry, services and personal loans.

Broad-based growth in credit is important to ensure a balanced growth in the economy.

The Central Bank also said its monetary policy actions have effectively translated into yields and borrowing rates, which have come down quite sharply in the recent past.

The Central Bank fell short of making public its growth projections for the economy for 2025 but expects a solid growth, as a result of the totality of the monetary, fiscal, exchange and other policies of the government and also the structural reforms.

The economy grew by a solid 5.0 percent in 2024, turning from two years of contractions, supported by all four economic sectors and the government expects a similar growth in 2025.

However, the economy in size still remains below its peak levels about seven years ago and the Central Bank governor said that it would take another year or two to recoup the lost economic output, after a deeper contraction in 2022 and 2023.

In US dollar terms, the economy is currently at the US $ 100 billion level.