2024-07-24 05:52:46
The central bank claims that the country’s economy has started to turn around even if high inflation continues. For this reason, the monetary policy for the first half of the current fiscal year 2024-25 (July-December) has kept the interest rate unchanged. At the same time, it allowed the government to borrow more from the banks. On the other hand, the private sector credit flow has been kept unchanged. All in all, Bangladesh Bank has given a contractionary monetary policy this time.
On Thursday (July 18), Bangladesh Bank published the ‘Monetary Policy Statement’ for the period of July-December of the current financial year.
The central bank formulates and expresses monetary policy to strike a balance between controlling inflation and achieving the desired growth. Monetary policy is very important in the financial management of the country. Through this, a plan of how much domestic debt, money supply, domestic wealth, foreign wealth will increase or decrease is presented.
According to the custom of the central bank, so far the monetary policy was announced through a press conference. But breaking the custom, this time they published it on their website instead of holding a press conference. Due to ban on entry of journalists to Bangladesh Bank, the media workers including Governor Abdur Rauf Talukder and Deputy Governor have been boycotting all the events of this regulatory body. That is why central bank published monetary policy on website.
According to the central bank, the country’s economy has started to turn around. However, inflation is still high. In such a scenario, the current contractionary monetary policy will continue until inflation reaches a tolerable level. Besides, the central bank has set a target of keeping inflation at or near 6.5 percent at the end of the current financial year. Although inflation has been above 9 percent for a long time.
NPLs are undermining financial stability, the central bank says NPLs are undermining financial stability as well as undermining the ability to lend to productive investment. As a result entrepreneurs are not getting loans as per demand. According to Bangladesh Bank, it is trying to reduce default loans by emphasizing on transparency, good governance and efficiency – but this claim is not being observed in reality. According to the latest data, in the last three months, defaulted loans have increased by Tk 34 thousand crores to over Tk 1 lakh 82 thousand crores.
In the currency policy, Bangladesh Bank has said that from now on, in the case of importing cars, fruits, flowers and cosmetics, these products should be imported only by depositing cash against the letter of credit. Apart from this, the issue of advance payment for import of other products has been left to the bank.
The new monetary policy kept private sector credit growth unchanged. Private sector credit growth has reached 9.8 percent till last June. This rate of growth of private loans has been maintained until next December.
The growth of public sector credit stood at 12.8 percent till last June. In the new monetary policy, the government debt growth has been fixed at 14.2 percent. That is, the government has been given the opportunity to take more loans from the banking sector. In addition, the central bank has announced that it will not increase the supply of currency by printing new money (reserve money). Reserve money growth in June was 7.9 percent. The regulator has set a target of reducing this growth to 2 percent in December.
The size of the budget for the current financial year 2024-25 has been estimated at 7 lakh 97 thousand taka. This huge budget deficit has been estimated at 2 lakh 51 thousand 600 crores. And the deficit amount without grants is 2 lakh 66 thousand crores. Which is 4.6 percent of the total GDP.
The government has chosen the banking sector as the main source of hope to meet the huge budget deficit. As a result, the government has set a target that the bank will take a bank loan of 1 lakh 37 thousand 500 crores to meet the deficit. This figure is 5 thousand 105 crore more than the target of the current financial year. In the budget of the current financial year, the government had set a target of taking a loan of 132 thousand 395 crores from the banking system. However, in the revised target, it was increased to 155 thousand 935 crores.