BB announces new monetary policy tomorrow
The Bangladesh Bank will take the private sector foreign loans into consideration in setting its target of private sector credit growth in the monetary policy to be announced tomorrow, said BB officials.
The BB is going to unveil the new monetary policy for the fiscal year 2013-14 with an expansionary policy after two years of contractionary policies in a bid to stimulate the dwindling private sector.
The BB has set a credit growth ranging between 16 per cent and 17 per cent in the private sector for the FY14.
A BB official told New Age that the BB had taken the initiative of taking the foreign loans into consideration in setting the target of the private sector credit growth as the recent credit flow of the local scheduled banks had decreased significantly.
The credit growth in the private sector will appear robust once the private sector foreign loans are included in the target, he said.
Besides, the private sector foreign loans increased significantly in the last two years.
The private sector foreign loans totalled over $1.49 billion in 2012, which were almost double than the previous year’s figure, according to the Board of Investment data.
The private sector received $818.88 million in foreign loans in 2011, $302.44 million in 2010 and $385.78 million in 2009.
Another BB official said the BB had set contractionary monetary policies in the last two fiscal years to check inflation although the policy affected the private sector severely.
He said the expansionary stance of the BB was a belated move as the credit growth in the private sector had already hit a five-year low in May due to a sluggish investment trend amid political unrest.
The growth stood at 11.43 per cent against the central bank’s target of 18.5 per cent for the January-June term of 2013, according to the BB data.
The credit growth in the private sector decreased every month between July and May of FY13.
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 initiatives, 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.
He feared that 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 the majority of the businessmen adopted a ‘wait and see’ approach due to the recent spates of political violence ahead of the national elections, he said.
‘The existing political situation will not change much in the second half of this year than the first half. So, confidence crisis among the business people would persist in the months to come,’ he said.
-With New Age input
