Leading trade promotional organisations Tuesday have found soaring inflation and keeping government borrowing within the target to be the key challenges to attaining targets set in the latest monetary policy.
They said increased public sector borrowing from the banking sector would create a crowding-out effect in the economy.
They, however, observed that the central bank should take cautious steps so that the government borrowing does not exceed its target.
They came up with the reactions on the latest monetary policy announced by Bangladesh Bank (BB) Monday for the second half of the fiscal year (FY) 2013-2014.
The BB announced the second half-yearly monetary policy statement (MPS) which many analysts believe is simply continuation of its earlier policy.
It kept programmes for broad money at 17.0 per cent, which is similar to that of the immediate-past monetary policy.
However, they welcomed some moves taken by BB, like rescheduling facilities for genuine borrowers.
They also welcomed the BB request to the banks to be aware of the difficulties faced by the small and medium enterprises (SMEs).
Extending loan from Export Development Fund (EDF) to export sectors for importing materials is also a positive step, they viewed.
Kazi Akram Uddin Ahmed, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said the central bank has taken into consideration the assumptions about the recent domestic disruptions in business.
"I think formulating policies by focusing on such issues will help provide some policy supports to the affected industries," Mr Akram said.
Mr. Akram also said the BB call for mobilisation of fund from the capital market would help in the rebound of the stock market.
"In my view, the number of IPOs (initial public offerings) might rise as the central bank has asked the big enterprises to mobilise fund from the capital market," Mr Akram said.
The FBCCI president said some assumptions relating to offering rescheduling facilities to the genuine borrowers and the small and medium enterprises (SMEs) would help sustain the affected industries that bled amid the general shutdowns and blockades.
Dhaka Chamber of Commerce and Industry (DCCI) said the government borrowing from the banking sector was targeted at Tk 260 billion.
"We feel that Bangladesh Bank should handle the issue carefully, so that the amount cannot exceed target," said a press release issued by the DCCI.
The latest MPS emphasised enhancing investment and reducing inflation in the country. The DCCI said private sector credit growth has been targeted at 16.5 per cent.
The DCCI said the high rate of interest on bank loan and political instability were major factors behind not achieving the target of credit to the private sector set in the July MPS last.
It urged Bangladesh Bank to take effective steps for achieving target of the private sector credit growth through reduction in the spread of interest rate of the commercial banks.
The latest MPS for January-June stipulates that public sector credit growth has increased to 22.9 per cent from the existing 19.5 per cent.
The DCCI said Bangladesh Bank, the Ministry of Expatriates' Welfare and Overseas Employment and the Ministry of Commerce should take concerted efforts to boost the remittances and export receipts.
Mahbubul Alam, president of Chittagong Chamber of Commerce and Industry (CCC&I) said containing inflation is one of the key objectives of the MPS.
"I think combating food inflation will be the major challenge for the latest MPS, as the Boro paddy might be affected leading to rise in food inflation." Mr. Alam said the target for the private sector should have been enhanced to promote both the established and new enterprises.
"The programme for the credit to the private sector is 16.5 per cent and it is exactly the same as the earlier MPS," Mr Alam said.
He said obstructions to quick release of food imports from the ports should be eased. "I think this will expedite food cargo movement and help lower the prices of imported food products."
He, however, said the central bank has been giving its due attention to providing adequate agricultural loans.
