Business leaders have welcomed the Bangladesh Bank's Tk 60 billion refinancing package but called for stronger coordination between monetary and fiscal policies.
They say the effective implementation of the central bank's latest measures in the Monetary Policy Statement (MPS) for July-December 2026 will be crucial for reviving private investment and economic growth.
The Dhaka Chamber of Commerce and Industry (DCCI) expressed disappointment over the decision to keep the policy rate unchanged at 10 per cent despite private sector credit growth slowing to 5.0 per cent in May.
Its President Taskeen Ahmed said the business community had expected a more accommodative monetary stance to complement the investment-friendly fiscal measures announced in the Tk 9.38 trillion FY27 national budget.
He noted that inflation rose to 9.42 per cent in May despite four years of contractionary monetary policy, while the budget introduced a range of tax and duty incentives aimed at boosting private investment, business expansion, and industrialisation.
"The budget is expansionary, but the monetary policy remains restrictive. This disconnect between fiscal and monetary policies could weaken the budget's intended impact," he said.
According to Ahmed, elevated interest rates continue to keep borrowing costs high, limiting businesses' ability to expand despite fiscal incentives.
He welcomed the Bangladesh Bank's Tk 60 billion refinancing and incentive package to revive business activities but said its success would depend on transparent, efficient, and timely implementation.
Drawing lessons from previous refinancing schemes, he urged the central bank to simplify eligibility criteria, minimise documentation requirements, and expedite approvals so that CMSMEs, export-oriented industries, and other productive enterprises could access the facility without unnecessary delays.
While reviving shuttered industries was important, he said, businesses currently struggling to survive should receive priority support before they were forced to close.
Ahmed also expressed concern over the government's increasing reliance on bank borrowing, saying strong public sector credit demand was absorbing a large share of banking sector liquidity and leaving less financing available for private businesses.
"No matter how attractive the fiscal incentives are, their benefits will remain limited unless businesses have adequate and affordable access to finance," he said.
He stressed that closer coordination between fiscal and monetary policies was essential to ensure policy consistency and support sustainable private sector-led growth.
Meanwhile, speaking to The Financial Express, Business Initiative Leading Development (BUILD) Chairman Abul Kasem Khan said the success of the latest monetary policy would depend less on policy announcements and more on effective execution.
He said the Bangladesh Bank's objective of supporting economic activities while containing inflation was appropriate, and the Tk 60 billion refinancing package could stimulate employment and productive sectors if implemented properly.
"Allocating funds alone will not create jobs or boost production," Khan said, stressing that the package must be distributed transparently and monitored closely to ensure the funds were invested in factory expansion, machinery, production capacity, and new industrial ventures.
Without proper oversight, he warned, the facility could be misused, increasing the risk of non-performing loans.
Khan said maintaining a relatively tight monetary policy remained justified until inflation was brought under control, cautioning that a premature reduction in lending rates could reignite inflationary pressures.
At the same time, he said policymakers must strike a careful balance between price stability and economic growth.
He also welcomed the tax incentives announced in the national budget, saying they would improve business liquidity and reduce dependence on bank borrowing if businesses reinvested the savings in productive activities.
However, he argued that financing alone would not revive the industrial sector.
"Many factories remain closed not only because of financial constraints but also due to shortages of gas and electricity and other structural bottlenecks," he said.
He urged the government to ensure uninterrupted energy supplies, improve infrastructure, expedite regulatory approvals, and enhance the ease of doing business so that monetary and fiscal measures translated into higher investment and industrial output.
Khan also called for careful screening of businesses seeking support under the refinancing package to ensure that only viable enterprises with realistic prospects of resuming production received assistance.
"The government's objectives of boosting employment, industrialisation, and economic growth are commendable. Their success, however, will ultimately depend on transparent implementation, sound policy coordination, and an improved business environment," he added.
M Masrur Reaz, chairman and chief executive officer of Policy Exchange Bangladesh, said the latest Monetary Policy Statement contained several notable features.
He said one of its most significant aspects was the clear acknowledgement that inflation in Bangladesh continued to be driven largely by supply-side constraints.
"Despite recognising that supply-side factors remain the primary driver of inflation, the Bangladesh Bank has decided to keep the policy rate unchanged at 10 per cent. I believe this is a prudent decision," he said.
According to him, although inflation is being fuelled mainly by supply-side pressures, the role of monetary policy and its transmission mechanism should not be underestimated.
"It would be appropriate to maintain the current policy rate until December and then reassess whether there is room for a reduction. Holding the rate steady for now is the right approach," he said.
He also welcomed the central bank's measures on non-performing loan management, particularly its decision to move away from repeated loan rescheduling.
"Frequent rescheduling merely delayed the recognition of underlying problems instead of resolving them. The one-time settlement approach offers a better mechanism for resolving default loans and deserves support," he said.
Reaz also described the decision to leave the rates under the Standing Deposit Facility and the central bank's lending and borrowing windows unchanged as a positive step.
However, he said the policy statement could have gone further by outlining a clearer strategy for dealing with insolvent banks and non-bank financial institutions.
"There should have been greater clarity on how financially unviable institutions will be handled in the coming years, whether through resolution, mergers, acquisitions, consolidation or, where necessary, closure. The policy should also spell out how depositors' interests will be protected during the process," he said.
He welcomed the government's commitment to enacting the long-pending Money Loan Court Act and the Distressed Asset Management Company Act, describing both as important legal reforms.
"At the same time, it would have been better if the reform agenda had also included amendments to the Bangladesh Bank Order, which is essential for strengthening central bank independence, and the Bank Company Act, which is critical for improving corporate governance in banks and financial institutions.
"Incorporating these reforms would have made the legal reform package far more comprehensive," he said.
Overall, Reaz said, the monetary policy contains several positive initiatives but would have been stronger with clearer policy guidance on banking sector resolution and a broader package of financial sector reforms.
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