The country’s credit growth in the private sector increased slightly in January compared with that of the previous month as businesspeople have taken initiative to expand their business after the general elections which was held on January 5, said officials of Bangladesh Bank.
According to Bangladesh Bank data released on Monday, the credit growth in the private sector slumped to 11.08 per cent in January 2014 compared with that of 14.83 per cent in the same month of 2013.
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, a BB official told New Age on Monday.
The credit flow to the private sector stood at Tk 4,78,128.70 crore in January 2014 against Tk 4,30,429.30 crore in the same month of 2013. It was Tk 4,07,901.60 crore in January 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, the BB official said.
Under the circumstances, the businesspeople adopted a ‘wait and see’ approach to expand their business in the period, he said.
The political uncertainty is still persisting among the businesspeople as the majority number of the country’s political parties rejected the ‘one-sided national elections’.
For this reason, the credit growth in the private sector may decline in the months to come if the uncertainty continues, he said.
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 robust import growth in January has mainly put a positive impact on the private sector credit growth, he said.
The import increased by 10.85 per cent in January of this year against a negative growth of 6.45 per cent in the corresponding month of last year due mainly to higher import of food gains — particularly rice and wheat — and capital machinery.
The BB data showed that the overall settlement of letters of credit, generally known as actual import, had stood at $3.29 billion in January this year. The figure was $2.96 billion in January 2013 and $3.17 billion in January 2012.
The credit growth in the overall domestic sector also increased to 11.17 per cent in January 2014 compared with that of 13.78 per cent in the corresponding month of 2013.
The total credit in the domestic sector in January stood at Tk 6,05,464.10 crore against Tk 5,44,652.40 crore in the same month of 2013.
The BB official said the government had significantly declined its borrowing from the banking sector in the recent months, but the overall credit growth in the domestic sector had increased in January due to an increased credit growth in the private sector.
The government borrowing declined in the period due to a slower pace in implementation of annual development programme amid political turbulence.
-With New Age input
