The Bangladesh Bank has scheduled to unveil the monetary policy statement for the fiscal year 2020-2021 on July 29 with the aim to support economic revival through acceleration of private sector credit growth, said officials.
The central bank has decided to scrap organising the customary press briefing to announce the monetary policy statement due to COVID-19 outbreak, said a senior BB official close to the monetary policy drafting body.
The BB would publish the monetary policy for FY21 on its web site this year instead, the official said.
The official said, ‘We are going to frame a supportive monetary policy to achieve the GDP growth and inflation targets amid the coronavirus pandemic and it would narrate the projections elaborately.’
For FY21, the government has set the gross domestic product growth target at 8.2 per cent with an aim to keep inflation within 5.4 per cent.
The official said that the central bank would set the money supply target at a rate which would support achievement of both targets.
Before FY20, the central bank declared the monetary policy statement twice formally in a financial year.
However, the BB started to declare the policy formally once a year from FY20.
The BB is going to announce the monetary policy at a time when the country is set to observe sharp economic fall due to the coronavirus outbreak in the country.
Private sector credit growth plunged as low as 8.61 per cent in June this year while the BB’s target was to take the growth rate to 14.8 per cent in the fiscal year 2019‑2020.
BB officials said that the central bank would set a supportive monetary policy for FY21 so that the private sector gets adequate loans to help reopen businesses and match operation levels before the shutdown.
Even an expansionary monetary policy would not do everything, the official said, adding that the government’s heavy borrowing target from the banking system would pose a great challenge.
In FY20, the dismal growth in the private sector growth was attributed to the Tk 85,231 crore the government borrowed from the banks.
The same trend may be observed in FY21 as the government fixed a Tk 84,980-crore bank borrowing target for the fiscal year.
Economists have cautioned that the government’s high bank borrowing would be a barrier in accelerating private sector credit growth.
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