Bangladesh Bank (BB) is likely to announce the half-yearly monetary policy for the first half of the current 2016-17 financial year on Tuesday with a focus on liberalising the private-sector credit policy to spur private investment.
BB Governor Fazle Kabir will unveil the monetary policy statement (MPS) for the July-December period at the central bank headquarters in the city. "We are finalizing the MPS, which will be unveiled on July 26 at 11am," BB's chief spokesperson Subhankar Saha told state-run BSS today.
Earlier, BB Chief Economist Biru Paksha Paul said, "Like previous ones, the next MPS would be finalised in line with the national budget while it would have major focus on areas including credit, GDP (gross domestic product), inflation and exchange rate."
In the last MPS, BB projected GDP growth rate at 6.8 to 6.9 percent and inflation at 6.2 percent for FY16, ending in June 30.
This will be the maiden monetary policy at the helm of bureaucrat-turned-governor Fazle Kabir, who succeeded Dr. Atiur Rahman following his resignation after the sensational cyber heist of $81 million from Bangladesh Bank’s account with the US Federal Reserve Bank.
Rahman’s two consecutive terms, the country’s banking sector was rattled with several large scale loan forgeries and scams. On this backdrop, the central bank tightened the policies related to loan approval with a special vigilance on large loan proposals, resulting in a sluggish credit growth to the private sector.
Political instability and high rate of interest also squeezed the credit flow and caused a sluggish private investment scenario in the country for quite a few years since 2012.
However, the central bank has been persuading banks since the middle of last year to bring down the lending rates to create a more competitive era for private sector entrepreneurs. As result, private sector credit growth stood at 16.40 percent surpassing the target of 14.80 percent for the January-June 2016 period.
The central bank sources said the target for growth in private credit in the new monetary policy will take into consideration the demand side.
“Banks have reduced both lending and deposit rates and this is the time for entrepreneurs to seek loans. So, the demand side may be stronger.