Economic growth remains robust and broad based with all sectors contributing to the expansion of output. Credit flows continue to rebound with credit to the private sector from commercial banks growing on a year on year basis by 12.8 per cent in August 2010, further reinforcing the growth prospects. At the same time, year on year growth in broad money remains moderate at 13.9 per cent in August.
The successful issue of the 10-year international sovereign bond on 27 September at a comparatively lower coupon rate of 6.25 per cent and attracting an order book of more than 6 times the value of the bond reflects the improved investor confidence in the economy. Gross international reserves further increased with the receipt of the fifth tranche of the IMF-SBA facility and the proceeds of the international sovereign bond.
Inflation, as measured by the year on year change in the Colombo Consumers’ Price Index (2002=100) increased in September to 5.8 per cent from 5 per cent in August. However, inflation is expected to remain subdued over the coming months.
The release of the next regular statement on monetary policy will be on 16 November 2010.
