Central Bank Deputy Governor Priyantha Fernando has sent a letter saying the Business Times report of a speech he made and carried in last week’s issue headlined “Sri Lanka must double credit flow to achieve target growth” had some inaccuracies.
With reference to the reported comment that “Sri Lanka would have to double its present credit flow from US$ 1.5 trillion to US$ 3 trillion to achieve its target income per capita of US$ 4,000…..”, Mr Fernando said what he mentioned was that, “With Sri Lanka’s per capita income expected to double rapidly in the next 5 years to US$ 4,000 there will be a huge challenge for the financial sector to meet the credit needs to support the growth in income. It is estimated that the present credit flow of Rs. 1.3 trillion will have to go up to a range of Rs. 3.0 trillion to Rs.3.5 trillion.”
Another reference where he was reported as saying that, “: …….., movable assets such as livestock, agricultural equipment, etc. accounted for 70% of the collateral for Sri Lanka’s SMEs,” Mr Fernando said, he had stated that, “ In developing countries about 78 % of the capital stock of a business enterprise is typically in movable assets such as machinery, equipment or receivables while only 22 per cent is in immovable property such as land. Financial institutions are reluctant to accept movable property as collateral. Banks and finance companies prefer land and real estate as collateral. The story is applicable on the Sri Lanka scenario.”