Bangladesh Bank is likely to increase private sector credit growth target in the upcoming monetary policy for the financial year 2014-15 in a bid to stimulate dwindling private sector, said officials of the central bank. The BB may announce the monetary policy in the second week of July. A BB official told New Age on Wednesday that the central bank might set the private sector credit growth target between 17 per cent and 17.50 per cent for the FY15 in line with the proposed GDP growth target of 7.3 per cent set by the government.
The expansionary monetary policy would not put much impact on the private sector if the existing political uncertainty persists in the months to come, he said.
But, the central bank might take the expansionary stance to raise the confidence level of the businesspeople, he said.
Under the monetary programme for July-December, 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.
The BB usually announces the monetary policy statement in the last week of July, but this time it will declare the MPS in mid July due to Eid-ul-Fitr, a religious festival for the Muslims to be held in late July.
As part of the move, the BB has already started to seek suggestions from different quarters of the society about the next monetary policy through its web site, he said.
Besides, the BB will arrange two meetings between June 23 and June 24 with the stakeholders to know their thoughts in this regard.
Another BB official said that there was no much possibility of improvement in the existing sluggish business situation in the FY15 as the country’s two major political alliances were yet to reach a compromise on the general polls’ issue, he said.
He said that the central bank was trying utmost to make vibrant the private sector this financial year, but it failed to inject the optimum financing due to the political unrest.
The country’s credit growth rate in the private sector increased slightly in April from the previous month but it still remained very low in accordance with the central bank target of 16.50 per cent.
The year-on-year credit growth rate in the private sector stood at 11.86 per cent in April compared with that of 10.46 per cent in March.
The BB official predicted that the central bank would fail to achieve its MPS target for the private sector in the upcoming fiscal year if the ongoing financial situation persists.
The BB earlier announced a number of contractionary monetary policies in the last few years in line with the International Monetary Fund’s condition, he said.
But, the situation now has changed much as the credit demand has declined drastically from the private sector, 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 this financial year much lower than the government target of 7.2 per cent.
The BB official, however, said that the central bank would also give importance to containment of the inflation when it frames the monetary programme.
-With New Age input
