Dhaka, July 31 – The Bangladesh Bank (BB) set the targets of credit growth in public and private sectors at 24.3 per cent and 14.8 per cent respectively for the fiscal year 2019-20 amid the shrinking demand for credit.The Bangladesh Bank Governor Fazle Kabir said that the new monetary policy statement is ‘cautiously accommodative’ which will help to facilitate the government’s 8.2 per cent GDP growth target.
“Like in the past, the new monetary policy is cautiously accommodative for achieving the targeted GDP growth and creating employment opportunities,” said BB governor while announcing the monetary policy for FY20 at a press conference at the central bank headquarters in the capital yesterday.
According to BB, private sector credit growth hit a six-year low of 11.29 percent in June.
The governor said the BB has decided to enforce one monetary program every financial year, effective from the current fiscal, instead of twice every fiscal. Generally, BB has been in practice to announce two MPS—one in January and another in July—every fiscal year, he added.
The Bangladesh Bank (BB) has projected domestic credit growth ceiling at 15.9 per cent in the fiscal year 2019-20 (FY20) accommodating 14.80 per cent, keeping CPI inflation contained within the target ceiling of 5.5 percent.
According to the MPS, the policy rates, including CRR (cash reserve requirement), SLR (statutory liquidity ratio), Repo, and Reverse Repo, remained unchanged for the current fiscal year.
Bangladesh Bank has proposed to provide immediate 2 per cent incentive if any expatriate sends one thousand dollars or remittance. If the income exceed more than one thousand dollar, the documents will be scrutinized. Bangladesh Bank has already sent such a proposal to the finance ministry regarding this matter.
In the new monetary policy, private sector credit growth is expected to rise to 13.2 per cent by December and to 14.8 per cent by June 2020. Until last June, private sector credit growth stood at 11.3 per cent. And till December, the growth in public sector credit has been estimated at 25.2 per cent and 24.3 per cent by June 2020. Until last June, the credit growth in the public sector had increased by 21. 1 per cent.
Speaking at the announcement of the monetary policy, Governor Fazle Kabir said, “Bangladesh Bank is going to open market operation activities at an interest rate from the current monetary aggregate based monetary policy.” This will have a direct impact on interest rates by giving or raising liquidity to banks. This will increase the effectiveness of the monetary policy. The governor said such tactics are being used in middle and advanced economy countries. – Staff Reporter
