CPD fires salvos at central bank over monetary policy
Sunday, 15 July 2007
FE Report
The Centre for Policy Dialogue (CPD) has said the monetary policy announced by the Bangladesh Bank (BB) would have a negative impact on the economy, hold back investment, employment and income and suggested necessary revision to the policy.
"The monetary policy has been prepared as per the prescription of the International Monetary Fund (IMF) instead of giving priority to the national interest," said Executive Director of CPD Debapriya Bhattachariya at a press conference Saturday.
The CPD executive also came down heavily on the government's move to further increase the prices of fuel oil, gas, electricity and fertiliser saying that the government took such move as per the prescription of the IMF.
"It will be a suicidal step for the country if the government increased the prices of fuel oils, gas and fertilisers on the basis of prescription from the IMF," he said blaming the government for coming close to the IMF and the World Bank (WB) for, what he said, taking policy decisions.
Thursday last, BB announced a cautious monetary policy for July-December of fiscal 2007-08, aiming to curb inflationary pressure on economy.
While elaborating the possible impact of the monetary policy on the economy, Debapriya said the policy may help ease inflation to some extent but it is not consistent with the economic growth target.
"The monetary policy will push up interest rates of bank loans as the government will raise interests on treasury bills, government bonds and reduce the same on and reverse repo," he pointed out.
As a result, it would affect investment and creation of job opportunity, Debapriya said adding the BB should have taken steps to reduce interest rates to encourage private sector at the moment when the private sector suffered a major shock amid anti-corruption drive.
Referring to the excess liquidity of around Tk 106 billion in the banking system, he said such surplus liquidity shows that the investment slowed down and this situation demands immediate measures to help reduce the cost of fund.
He expressed the fear that the WB's proposal to provide Bangladesh with a budgetary support loan with US$200 million was linked with condition to IMF loan.
Referring the move to raise price of fuel oil, gas, electricity and fertiliser Debapriya alleged that the government's planned more to increase prices of these items was to get $200 million in loans from the WB.
The Centre for Policy Dialogue (CPD) has said the monetary policy announced by the Bangladesh Bank (BB) would have a negative impact on the economy, hold back investment, employment and income and suggested necessary revision to the policy.
"The monetary policy has been prepared as per the prescription of the International Monetary Fund (IMF) instead of giving priority to the national interest," said Executive Director of CPD Debapriya Bhattachariya at a press conference Saturday.
The CPD executive also came down heavily on the government's move to further increase the prices of fuel oil, gas, electricity and fertiliser saying that the government took such move as per the prescription of the IMF.
"It will be a suicidal step for the country if the government increased the prices of fuel oils, gas and fertilisers on the basis of prescription from the IMF," he said blaming the government for coming close to the IMF and the World Bank (WB) for, what he said, taking policy decisions.
Thursday last, BB announced a cautious monetary policy for July-December of fiscal 2007-08, aiming to curb inflationary pressure on economy.
While elaborating the possible impact of the monetary policy on the economy, Debapriya said the policy may help ease inflation to some extent but it is not consistent with the economic growth target.
"The monetary policy will push up interest rates of bank loans as the government will raise interests on treasury bills, government bonds and reduce the same on and reverse repo," he pointed out.
As a result, it would affect investment and creation of job opportunity, Debapriya said adding the BB should have taken steps to reduce interest rates to encourage private sector at the moment when the private sector suffered a major shock amid anti-corruption drive.
Referring to the excess liquidity of around Tk 106 billion in the banking system, he said such surplus liquidity shows that the investment slowed down and this situation demands immediate measures to help reduce the cost of fund.
He expressed the fear that the WB's proposal to provide Bangladesh with a budgetary support loan with US$200 million was linked with condition to IMF loan.
Referring the move to raise price of fuel oil, gas, electricity and fertiliser Debapriya alleged that the government's planned more to increase prices of these items was to get $200 million in loans from the WB.