Bangladesh Bank will announce its monetary policy statement for the first six month of 2014 on January 27, said officials of the central bank.
They said the BB would keep unchanged the private sector credit growth target in the monetary policy considering political unrest. Under the monetary programme for July-December last year, the central bank had set 15.5 per cent credit growth target for the private sector by December 2013 and 16.50 per cent by June 2014.
A BB official told New Age on Monday that the monetary policy for July-December of 2013 proved almost ineffective as the private sector credit growth had posted only an 11.13-per cent growth in November 2013 compared with that of a 17.41-per cent growth in the corresponding month of 2012.
He said that the credit growth in the private sector might have declined further in December 2013 as the businesspeople were reluctant to expand their enterprises by receiving credits from the banking sector due to political unrest.
There is no much possibility of improvement in the existing business situation in the second half of the current fiscal year 2013-14 as the country’s two major political alliances are yet to reach a solution to a deadlock over the general polls, he said.
For this reason, the private sector credit growth might decline further in the period, he said.
When asked whether the BB would reduce the target of the private sector credit growth for the second half of the FY14 considering the lower market demand, he said the central bank would keep the target almost unchanged as it would face huge criticism from different corner if it changes the target.
The BB set a number of contractionary monetary policies in the last three years in line with the International Monetary Fund’s suggestion, he said.
But, the situation has changed much as the credit demand has declined drastically due to the existing political uncertainty, the official said.
Under the circumstances, the BB is now facing a tough situation to make decision about the upcoming monetary policy, the BB official said.
If it injects excess liquidity into the market, it will create a speculative situation in the private sector, he said.
Against the backdrop, the BB will try its best to inject maximum finance into the productive sector to ensure a satisfactory GDP growth for the FY14, the official added.
-With New Age input
