The business community has pleaded for formulating private sector-friendly monetary policy (MPS) to bolster economic growth.
They made the plea at a dialogue on "Monetary Policy Statement: Implication on Private Sector" organised by the Dhaka Chamber of Commerce and Industry (DCCI) at its auditorium in the capital, says a press release.
Bangladesh Bank governor Fazle Kabir attended the programme as chief guest.
In his welcome note, DCCI president Osama Taseer said inflation rate, interest rate, currency exchange rate, broad money and credit growth target in the MPS are closely associated with the private sector development.
He also said the recent MPS looks cautionary though salient features of it may help boost the private sector credit flow and scale up the industrialisation, employment and trade, resulting in expected gross domestic product (GDP) growth this year.
"Growing non-performing loans apparently challenge the banking sector stability creating higher cost of capital incidence on the private sector and limiting credit flow to industries and SMEs," he noted.
He also identified capital flight, weak exchange rate, unstructured capital market, lower foreign direct investment inflow, unemployment, negative trade balance and the lack of export diversification as other challenges.
These may hold back the desired private sector growth, he said.
Fazle Kabir said the private sector is the engine of economic growth and the government always focuses on the increased private sector credit growth.
"We have targeted private sector credit growth to 16.5 per cent, which went down 13.3 per cent by December last year due to the national election related development," he said.
Regarding high yield rates of national savings certificates, Mr Kabir said this tool is for small investors as part of the social safety net undertaken directly by the government.
About non-performing loans, he said banks should be careful about credit quality and monitor whether the loans are being utilised properly.
He defended the central bank's action, saying it injects dollar into the market to keep the foreign exchange rate at a tolerable level since import of capital machinery, heavy machinery and industrial raw materials increased.
Before announcing MPS, he said, the central bank will consider holding consultation with relevant parties.
Presenting the keynote paper, DCCI senior vice president Waqar Ahmad Choudhury said the MPS is considered a catalyst for private sector growth.
The MPS focused on 7.8 per cent GDP growth, keeping inflation under 5.6 per cent, encouraged bond market development, private sector credit growth to 16.5 per cent, which are positive for attracting the private sector investment, he said.
Prof Dr Mahmood Osman Imam of Dhaka University and his colleague Dr M A Baqui Khalili spoke as panel discussants.
Former DCCI president MH Rahman, BIBM Professor Helal Ahmed Chowdhury, DCCI directors Minhaz Mannan Imon Akber Hakim, Nuher L Khan and Ashraf Ahmed, and Brokers Association of Bangladesh president Shakil Rizvi also spoke at the discussion meeting.
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