Sri Lanka’s credit to the private sector expanded by Rs. 790 billion in 2024 with the majority of the expansion coming in the second half of the year due to increased economic activity, according to the Central Bank of Sri Lanka (CBSL).

Speaking at the monetary policy press briefing, Central Bank Governor Dr. Nandalal Weerasinghe said that the credit growth trend seen in 2024 enabled the economy to grow about 5%, which confirms economic recovery and increased economic activity.

He said that private credit growth, imports and current account deficit are all indicators of whether aggregate demand will be higher than the potential capacity or growth.

“Forward-looking basis aggregate demand is going to pick more than the capacity of the country,” Weerasinghe said.

Credit to the private sector expanded to Rs. 790 billion in 2024 after recording an expansion of Rs. 146 billion in the first half of the year, private credit expanded by Rs. 359.4 billion alone in the last quarter of 2024 after December saw a private credit expansion of Rs. 193.2 billion.

The monetary policy statement said that private credit growth continues to accelerate supported by lower market lending interest rates and reflecting the recovery in economic activity, and it added that the expansionary momentum of credit to the private sector is expected to persist.

Weerasinghe said that December credit growth is purely due to seasonal factor which is usually seen in other years as well.

However, he said that if there is going to be continuous more than-expected high credit growth, in the coming months, it’s an indication that the demand is picking up more than expected.

“Right now, we don’t see that kind of concern,” he added.