Economists and experts on Thursday said that the Bangladesh Bank had given priority to the next national elections when framing the monetary policy
statement for the first six months of the fiscal year 2013-14.
Dhaka University economics department chairman MA Taslim told New Age that the BB had set the targets of credit growth in the public and private sectors in the monetary programme considering the upcoming national elections.
In the new monetary policy announced on Thursday, the BB raised the credit growth in the public sector to 33.7 per cent by December 2013 and 19.5 per cent by June 2014 from that of 13.5 per cent in December 2012 and 20.80 per cent in June 2013.
Taslim said the BB had increased the credit growth in the public sector significantly in the first half of this fiscal year due to the upcoming national elections.
The government will borrow huge amount of money from the banking sector in a bid to spend on its election-oriented activities.
The BB, however, set lowered target of public sector credit growth in the second half of the current fiscal year as the government borrowing in the period would drop after the national elections, he said.
The BB gave priority to the elections also in setting the credit growth in the private sector as the central bank set a credit growth of 15.5 per cent by December 2013 and 16.5 per cent by June 2014 from that of 18.3 per cent in December 2012 and 18.5 per cent in June 2013, he said.
Taslim said the BB had set a lower credit growth in the private sector in the first half of this fiscal year than the second half of the fiscal year.
He said the political unrest would continue in the first half of the FY 2013-14 ahead of the elections which would discourage the businessmen to take loans from the banking channel.
He feared that the target of credit growth in the private sector for the first half of the fiscal year might not be achieved as the businesspeople have adopted a ‘wait and see’ approach due to the recent spates of political unrest.
Former caretaker government adviser Mirza Azizul Islam said credit growth in the public sector was high in the first half of the FY 2013-14 as the election-oriented spending by government would increase in the period.
Achievement of the credit growth target in the private sector will depend on the country’s political situation in the period, he said.
The credit growth in the private sector decreased massively in the last few months due to the ongoing political turmoil, he said.
He said, ‘The BB has framed the new monetary programme considering the election year atmosphere.’
Former BB governor Salehuddin Ahmed expressed dissatisfaction over the new monetary policy as he thought that the central bank had set a credit growth in the private sector for this term lower than the market demand.
He said that the BB should set a credit growth of around 18 per cent for the private sector to encourage the business community.
-With New Age input
