GR’s wrath forces CBSL to take new steps to boost economy

The Central Bank on Tuesday said that it will implement new credit schemes to support the revival of the country’s economy. TheBank cuts its’ statutory reserve ratio (SRR) by 200 bps to release $600 million in cash liquidity. The monetary authority has also reduced policy interest rates by a total of 150 basis points and the reduction of the Bank Rate by 550 basis points.

CBSL also decided to provide funding to Licensed Commercial Banks (LCBs) at the concessionary rate of 1.00% against the pledge of a broad spectrum of collateral, on the condition that LCBs, in turn, will on-lend to domestic businesses at 4.00%.

According to the Central Bank, this is in addition to the already disbursed Rs. 27.5 billion under the refinance scheme introduced on 27 March 2020.

This new scheme along with the existing refinance Scheme will provide Rs. 150 billion in total to the businesses affected by the COVID-19 pandemic.

The moves came in the 11th hour following President blasting CBSL officials’ behaviour during a meeting held on Tuesday (16). President criticized Central Bank officials for failing to extend its support to the government’s proposals for economic revival, unlike the Central Banks of other countries.