📈 Private Sector Credit Rebounds to Surpass Rs. 11 Trillion in May

Private sector borrowing from the Sri Lankan banking system regained strong momentum in May 2026, marking the fourth-highest borrowing month in the past year despite recent currency pressures and policy tightening. • Overall Credit Figures Total outstanding credit to the private sector rose by 2.2% month-on-month (M-o-M) to Rs. 11.04 Tn in May (up from Rs. 10.8 Tn in April). Year-on-year (YoY) private sector credit growth accelerated to 27.8%. • Banking Sector Breakdown Domestic Banking Units (DBUs) grew 2.3% M-o-M to Rs. 10.47 Tn (+30.2% YoY). Offshore Banking Units (OBUs) edged up 0.8% M-o-M to Rs. 563.8 Bn, though contracting 4.3% YoY. • Public Sector and SOEs Net credit to the Government rose slightly M-o-M to Rs. 8.16 Tn, but declined 3.4% YoY. Credit to State-owned enterprises (SOEs) and public corporations stood at Rs. 493.5 Bn, contracting sharply by 22.6% YoY. • Policy & Currency Context To curb credit-driven import demand following sharp local currency depreciation, the Central Bank of Sri Lanka (CBSL) raised the Overnight Policy Rate (OPR) by 100 bps to 8.75% in late May. The Sri Lankan Rupee's year-to-date (YTD) depreciation widened from 1.4% in March to 5.4% by end-May, before sliding to 7.9% recently. • Monetary Aggregates Broad money (M2b) expanded by 12% YoY in May (up from 11.6% in April), while reserve money increased by 16.1% YoY, indicating continued monetary expansion alongside the credit pick-up.