Bangladesh Bank may keep unchanged the private sector credit growth target in the upcoming monetary policy for January-June of 2014 considering the existing political unrest, said officials of the central bank.

Under the monetary programme for July-December, the central bank had set 15.5 per cent credit growth target for the private sector by December 2013 and 16.50 per cent by June 2014.

The BB is likely to announce the new monetary policy in the last week of this month, they said.
The BB will hold a meeting today presided over by central bank governor Atiur Rahman to discuss about the projection of its next monetary programmes, they said.

The central bank deputy governors and its high officials will attend the meeting.
A BB official told New Age on Monday that the monetary policy for July-December of 2013 had virtually plunged in an ineffective situation as the private sector credit growth had posted only 3.77 per cent growth in July-October against six-month target of 15.5 per cent.

The BB data showed that the private sector credit growth had declined to 11.04 per cent in October 2013 compared with that of 20.60 per cent in the corresponding month of 2012.

The BB official said that the credit growth in the private sector would decline more in the last two months of 2013 as the businesspeople were reluctant to expand their enterprises by receiving credit from the banking sector due to the political unrest.

There is no much possibility to improve the existing business situation in the second half of the FY14 as the country’s two major political alliances are yet to reach a compromising level about the general polls, he said.
For this reason, the private sector credit growth will decline more in the period, he said.

When asked whether the BB would decline the target of the private sector credit growth in the second half of the FY14 considering the lower market demand, he said the central bank would keep the target almost unchanged as it would face huge criticism from the different corner if it made such type of decision.

The BB earlier set a number of contractionary monetary policies in the last three years in line with the International Monetary Fund’s condition, he said.

But, the situation has changed much as the credit demand has declined drastically due to the existing political uncertainty, the official said.

Under the circumstances, the BB is now facing a tough situation to make the decision about the upcoming monetary policy as there will create a

speculative situation in the private sector if it injects excess liquidity in the market, he said.
Against the backdrop, the BB will try best to inject optimum finance into the productive sector to ensure a satisfactory GDP growth for the FY14, the official said.

According to another BB official, the central bank usually organises two meeting with the stakeholders to collect suggestions before setting any monetary programme.

But, the central bank may not organise any meeting this time with the stakeholders if the non-stop blockade-like political movement continues, he said.

The BB has recently started to seek suggestions from every corner of the society about the next monetary policy through its web site, he said.