Bangladesh Bank is going to announce a new monetary policy for the first half of the current fiscal year on Sunday next, with a challenge to stimulate investment in private sector.

The credit growth target would be set at 16.5%, a senior executive of the central bank said yesterday.

The target would then remain same to what it was in the January to June period, which would also remain far short of the period’s target. He said the credit growth in the last six month would be 13.5% at best, portraying sluggish investment.

The credit growth remained far below from the programmes estimated in last several monetary policies.

“There will be no surprise in the new policy we are going to announce,” said Bangladesh Bank senior adviser Allah Malik Kazmi. He said credit space will be kept almost unchanged as local market would not be so crowded due to inflow of foreign loans.

The Monetary Policy Statement would continue with the existing measures to keep inflation below 7% and set the GDP growth above 7% in line with the government target of 7.3% for the fiscal year 2014-15.

“We will have policy to divert the liquidity to investment. We have already raised the cash reserve requirement (CRR) to absorb the excess liquidity from the market and have plans to increase it further, if needed,” he said.

He said the central bank will take steps to keep stability in the money market, but increase of investment would depend on political situation. “We will take the political situation under consideration in setting the monetary policy programmes as BNP announced to go for movement after Eid festival.”

The central bank expects import expenditure will rise this year, but will have no pressure on reserve as it has surplus current account balance. The current account may not remain surplus due to rise in import payment, but it would not be negative, he said.

He added that the central bank failed to achieve its target to use the credit growth set in the last few monetary programmes due to lack of confidence among the businesspeople amid political uncertainty.

Under the monetary programme for the fiscal year 2013-14, the central bank had set 15.5% credit growth target for the private sector by December 2013 and 16.50% by June 2014.

The BB data showed that the credit growth in the private sector stood at 11.39% in May and the central bank is expecting it would stand 13.5% at best at the end of June, which is far below the target.

The actual credit growth of the private sector was 16.6% in December 2012, which was far from the target of 18.3%. Then the central bank cut its credit growth target to 10.8% in June 2013 considering the lack of demand and achieved it.

But, the gap between the actual and programmed target widened during last two monetary policies amid political unrest. The actual credit growth stood at 10.6% in December 2013 against the programme of 15.5% and in May it stood at 11.39% against 16.8%, according to the Bangladesh Bank data.