BB announces monetary policy today, focusing on how to address possible setback in BoP in the days ahead

Bangladesh Bank would urge the government to take measures in increasing manpower export to offset a possible setback in the country’s foreign exchange balance.

It is going to propose the measure while announcing the Monetary Policy Statement (MPS) for the second half of the current fiscal year today, said a Bangladesh Bank official.

The central bank is apprehending the setback in the Balance of Payment (BoP) as it foresees a possible pick up in the import payments in the days ahead with the apparently stable political situation.

The import payments have been substantially slowed down during the first half of the fiscal due to the political unrest ahead of the national election held on January 5.

“Bangladesh Bank sees risk in maintaining the BoP position for the next fiscal year because of slower remittance growth,” Chief Economist Hassan Zaman told the Dhaka Tribune yesterday.

He said the slow-moving remittance inflow did not put any pressure on the BoP and exchange rate this year due to lower import payments. “But, if imports pick up next fiscal year and remittance inflow remains still negative, it will put pressure on the BoP.”

Amid the apprehension, he said, the central bank in its MPS is going to propose increasing the manpower export at a faster rate. It apprehends the negative remittance growth would have an adverse impact on the BoP in the next fiscal year.

The MPS would also slightly increase the credit growth target for the second half of the current fiscal year from its earlier target of 16.5% as the growth was much short of the target for December 2013.

“We have changed the credit growth target slightly as there is little chance to extend it considering the existing achievement,” Zaman said.

The MPS would also forecast the economic growth to range between 5.8% and 6.1%.