Monetary Policy For July-December
Pvt sector credit growth target to remain static
Bangladesh Bank is likely to keep unchanged the private sector credit growth target in its upcoming monetary policy statement for July-December 2014 due to a slow credit demand from the businesspeople amid political uncertainty, officials of the central bank said. The BB will announce the monetary policy at its headquarters in the capital tomorrow.A BB official told New Age on Thursday that the BB might set the private sector credit growth target between 16.50 per cent and 17 per cent in its next monetary policy statement as the businesspeople still showed a low interest to expand their business by taking loans from the scheduled banks.
The BB set private sector credit growth at 16.50 per cent for January-June 2014 although the growth stood at 11.39 per cent in May on the basis of year-on-year.
The BB official said that the credit growth in the private sector might stand around 11.50 per cent, much lower than the targeted rate set by the central bank.
The central bank, however, may increase the credit growth target to 17.5 per cent for the second half of the financial year 2014-15, he said.
The official said that there was not much possibility of improvement in the existing sluggish business situation shortly as the country’s two major political alliances were yet to reach a compromise on the general polls’ issue.
Besides, the opposite political parties have already declared that they will start a new phase of anti-government movement after Eid-ul-Fitr, he said.
Against the backdrop, the businesspeople are yet to get confidence back to expand their business.
For this reason, the central bank is going to keep unchanged the credit growth target in the private sector for the first half of the FY15, he said.
He said that the central bank tried utmost to make the private sector vibrant in recent times, but it failed to inject the optimum financing due to the political unrest.
The BB will also set a number of programmes in its next monetary policy to regain the confidence of the businesspeople, he said.
The BB official predicted that the central bank would fail again to achieve its MPS target for the private sector this financial year if the ongoing political situation persists.
The BB data showed that the credit growth in the private sector stood at 11.04 per cent in the FY14, which was the lowest in the last 13 years.
The BB earlier announced a number of contractionary monetary policies in the last few years in line with the International Monetary Fund’s condition, the official said.
But, the situation now has changed much as the credit demand from the private sector has declined drastically, the central banker said.
The lower credit demand has already hit the GDP growth for the FY14 as Bangladesh Bureau of Statistics projected that the country’s GDP growth stood at 6.12 per cent in the last financial year, much lower than the government target of 7.2 per cent.
The BB official, however, said that the central bank had also given importance to containment of the inflation when it framed the monetary policy for July-December 2014.
-With New Age input
