MONETARY POLICY JULY-DEC
BB to set 16-17pc pvt sector credit growth target
Bangladesh Bank is going to take an expansionary monetary policy for July-December of 2013 in a belated move to stimulate the dwindling private sector, said officials of the central bank.
The BB is likely to announce the monetary policy in the third week of this month.
Economists and BB officials told New Age on Tuesday that the expansionary monetary policy would not have much impact on the private sector, as majority of the business people were now reluctant to expand their business amid political unrest.
An official said that BB might set the credit growth in the private sector ranging between 16 per cent and 17 per cent for July-December of 2013.
The credit growth in the private sector decreased to 11.43 per cent in May year-on-year basis although the central bank is keeping a ceiling of 18.5 per cent credit growth for the sector in the first half of this year, according to BB data.
The credit growth in the private sector decreased every month between July and May of fiscal year 2012-13.
Under the monetary programmes for 2012-13, the central bank set 18.3 per cent credit growth for the private sector by December 2012 and 18.5 per cent by June 2013.
The central bank cut its policy interest rate in January of this year after four years to encourage the investment sector.
The BB initiative, however, failed completely in stimulating the private sector as it took the programme after implementing four contractionary monetary policies in a row, the BB official said.
Dhaka University economics department chairman MA Taslim said that the credit growth ceiling between 16 per cent and 17 per cent was higher than the present situation in the private sector.
But the BB would not be able to attain the credit growth of 16 per cent or 17 per cent due to the lower credit demand from the private sector, he said.
The private sector is now passing through a dwindling situation as majority of the businessmen adopted a ‘wait and see’ approach due to the recent spates of political violence ahead of the national election, he said.
The existing political situation will not change much in the second half of this year than the first half and the resulting ‘confidence crisis’ among the business people would persist in the months to come, he said.
‘The BB should take the expansionary monetary programme much earlier as the last few contractionary policies hit the private sector significantly. The new monetary policy will apparently be expansionary, but not in real terms as the programme will not boost the private sector,’ Taslim said.
Former BB governor Salehuddin Ahmed said that it was positive if the central bank set the credit growth between 16 and 17 per cent for the private sector.
‘The expansionary policy will help the banks to disburse their excess liquidity to the private sector’, he said.
-With New Age input
