In April state-run Bank of Ceylon borrowed 500 million US dollars from an international bond easing pressure on domestic credit markets.
From May electricity prices have been raised and there has also been good rainfall, which will help cut state enterprise losses.
It is not clear whether the March borrowings are for current year spending, due to revenue shortfalls, or to even partly cover arrears from last year.
The International Monetary Fund said about 0.5 percent of gross payment areas were pushed to 2013 to show a 6.4 percent of gross domestic budget deficit in 2012.
But the broader public sector deficit with loss making energy enterprises was 8.6 percent of GDP in 2012.The March borrowings are the highest since the central government and state enterprises borrowed 96.4 billion rupees in January 2012, at the height of Sri Lanka’s last balance of payments crisis, with central bank credit expansion partly driven by sterilized forex sales.
By end March, net credit to government (including central bank credit which had been contracting in previous months) was up 18.5 percent to 1,180.5 billion rupees with borrowings from rupee banking units was up 41.9 percent to 774.4 billion rupees from a year earlier.
Borrowings from foreign currency units were up 14 percent to 141 billion rupees equivalent in the 12 months to March.
Loans to loss making state enterprises were up 35.8 percent to 335.5 billion rupees from a year earlier.
State borrowings from the banking system have kept interest rates high and the private sector has been crowded out.
Credit to the private sector fell 9.5 billion rupees in March falling from a spurt of 18.0 billion seen in February with a 19.1 billion rupees growth in rupee borrowings slowed by a 11.1 billion rupees contraction in foreign currency loans.
Credit to private sector was up 10.9 percent from a year earlier to 2,395.6 billion rupees, slowing from 13.3 percent in February.
In the first quarter private sector credit grew just 37.2 billion rupees, compared to a 178.3 billion rupees expansion in net credit to the state or about 2.7 percent of projected GDP for 2013 including state enterprises, indicating the extent of a fiscal crunch.
Excluding contractions in Central Bank credit the state and state enterprises have borrowed 192.1 billion rupees in the first quarter or about 3.6 percent of GDP.
Monthly fiscal data for the first quarter which are usually released by the Central Bank from around April not so far been published for 2013.(Lanka Business On Line)