The country’s credit growth in the private sector plunged again in February compared with that of the previous month as businesspeople are yet to get confidence back 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 Wednesday, the credit growth in the private sector slumped to 10.73 per cent in February 2014 compared with that of 13.96 per cent in the same month of 2013. The year-on-year credit growth stood at 11.08 per cent in January 2014.
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 4,80,176.40 crore in February 2014 against Tk 4,33,628.50 crore in the same month of 2013. It was Tk 3,80,511.70 crore in February 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 political parties rejected the ‘one-sided national elections’.
The business people think that the political uncertainty will not disappear in the months to follow as the country’s two major political alliances are yet to reach any consensus over the next polls-time government, the official said.
The credit growth in the private sector may decline in the months to come if the uncertainty continues, he said.
Against the backdrop, the lower credit growth in the private sector would put an adverse impact on the country’s GDP growth, the official 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 credit growth in the overall domestic sector also increased to 11.18 per cent in February 2014 compared with that of 13.64 per cent in the corresponding month of 2013.
The total credit in the domestic sector in February stood at Tk 6,08,809.30 crore against Tk 5,47,601.70 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, which also played a role in decreasing the overall credit growth in the domestic sector in February.
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