Private sector credit falls by K16 billion in July
Gross credit to the private sector, or financial resources provided to the private sector by financial corporations, such as loans, purchases of non-equity securities and trade credits, decreased by K16.3 billion in July to K403.1 billion buoyed by increased repayments, the Reserve Bank of Malawi (RBM) has said.
The fall in private sector credit in July was in contrast to a K14.5 billion jump in June 2017.
In its Monthly Economic Review for July 2017 released last week, RBM said the fall was higher than the K1.8 billion decrease recorded in July 2016.
RBM says repayments were recorded in individual household loans and mortgages, whilst commercial and industrial loans and foreign currency denominated loans recorded uptake of credit.
“Specifically, household loans and mortgages repaid K44.3 billion and K1.4 billion, respectively on their loan facilities.
“In contrast, commercial and industrial loans and foreign currency denominated loans amounted to K28.5 billion and K3.8 billion in July 2017, respectively,” RBM said.
The central bank further notes that in terms of loans distribution by sector of activity, wholesale and retail trade remained the sector with a big share at 25.5 percent, which was higher than the 24.9 percent recorded in June 2017.
RBM further said the banking system credit to the public sector closed July 2017 at K490.4 billion, largely supported by net credit to government which rose by K29.6 billion to K473 billion.
“The central government’s indebtedness to the monetary authorities rose to K385.3 billion from K338.3 billion registered in the preceding month. Government borrowed mainly through Ways and Means advances and Treasury notes.
“Consequently, the outstanding stock of Ways and Means advances and of Treasury notes increased by K28.7 billion and K9.1 billion to K59.8 billion and K442.4 billion, respectively. Further, a decrease of K9.7 billion in government deposits with the monetary authorities, amplified the pressure on net credit to government from the monetary authorities,” RBM said.