The country’s credit growth rate in the private sector increased slightly in March from the previous month but still remained very low as businesspeople continued with their wait-and-see policy because of ongoing political uncertainty. According to Bangladesh Bank data released on Tuesday, the year-on-year credit growth rate in the private sector stood at 11.46 per cent in March compared with that of 10.73 per cent in February.
Bangladesh Bank officials said that although the rate rose slightly in March, it still remained well below the target of 16.50 per cent to be achieved by June as per the monetary policy.
Credit flow to the private sector stood at Tk 4,86,378.40 crore in March 2014 against Tk 4,36,353.90 crore in the same month of 2013. It was Tk 3,87,121.60 crore in March 2012.
The violent political conflicts in the first half of the FY14 among the major political parties over the process of holding general elections hit the private sector, a BB official told New Age on Tuesday.
Under the circumstances, the businesspeople adopted a ‘wait and see’ approach to expand their business in the period, he said.
Against the backdrop, private sector credit growth hit a 14-and-a-half-year low at 10.60 per cent in December of 2013 compared with that of 16.61 per cent in the same month of 2012 due to the political unrest over the general elections.
The political uncertainty is still persisting among the businesspeople as the majority number of the country’s political parties rejected the ‘one-sided national election’ which was held on January 5, the BB official said.
For this reason, credit growth in the private sector may decline in the months to come if the uncertainty continues, he said.
The robust import growth in the last few months has mainly put a positive impact on the private sector credit growth in March, he said.
The BB data showed that the country’s overall imports had registered a 13.49 per cent growth in the first eight months of the FY14 compared with that of a negative growth of 11.07 per cent in the same period of FY13.
The BB data showed that the overall settlement of letters of credit, generally known as actual import, had stood at US$ 24.12 billion in the first eight months of the FY14 against US$ 21.25 billion in the same period of FY13.
The BB in its latest monetary policy set 16.50 per cent credit growth target
in the private sector for January-June of 2014.
The expected credit growth target for the private sector will not be achieved if the current unfriendly business environment continued, another BB official said.
The lower credit growth will also put an adverse impact on the expected GDP growth, he said.
The government should take initiative to develop the country’s business environment in the quickest possible time so that the businesspeople will get their confidence back, he said.
-With New Age input
