Economists, businessmen hail monetary policy
FHM Humayan Kabir | Saturday, 19 July 2008
Economists, businessmen and bankers have hailed the new monetary policy of the central bank saying it will help boost the country's economy.
They said the new policy will enhance investment in productive sector and create more employment opportunities.
Bangladesh Bank Governor Dr Salehuddin Ahmed Thursday announced the monetary policy for July-December period of fiscal 2008-09 envisaging higher economic growth through continued expansion of credit to the productive sectors while keeping inflationary pressures under control.
Appreciating central bank's monetary policy, economist Professor Muzaffar Ahmed Friday said the new policy will encourage private sector investments, which will spur economic growth.
"I thank the central bank has been able to come out of IMF (International Monetary Fund) pressure and announce a pragmatic monetary policy," he said terming the new policy as "controlled expansionary monetary policy".
Prof Ahmed, however, said the policy is "pragmatic", but it might fuel inflation to some extent.
He said: "If the Bangladesh Bank fails to monitor its policy implementation strictly there is a possibility of hyper inflation or galloping inflation in the coming days."
"The government needs to be cautious in maintaining the consumption and import of different items at a tolerable level. It should encourage import of capital machinery and raw materials for more investment," he said.
President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Annisul Huq welcomed the monetary policy of the central bank and said: "The BB's initiatives to expand credit growth to the private sector are laudable. But we have to observe where the credit is going."
"If the credit goes into trading business instead of import of capital machinery and raw materials that will affect the economic growth," he said adding the central bank will have to ensure the flow of credit to the productive sectors.
Hailing the BB's courageous move Mr. Huq said the government's expansionary monetary policy might help boost the country's economic growth.
The IMF had asked the central bank to take a tight monetary policy to protect the country from global shocks and the economy from inflationary pressure.
Mr. Huq said: "If the infrastructure such as power and energy is not developed and quality of politics improved through a smooth transition the economic growth will be hampered much."
Khondkar Ibrahim Khaled, Bangladesh Krishi Bank chairman and former BB deputy governor, appreciated the BB's monetary policy and said: "If you consider the prevailing situation in the country the central bank's expansionary monetary policy is a right one."
"As the investment in the country is stagnant, food supply chain affected and employment opportunities shrunk, the new monetary policy will help boost investment and generate income of the people," he said
When asked whether the expansionary policy will raise inflation, the banker said: "Price factor is a major reason for inflation rather than the over supply of money. As there is inadequate investment and lack of business confidence, the supply chain has been hampered and income of the people squeezed. These are responsible for high inflation."
"As the country has been failing to check the inflationary pressure due to the global shocks, the government should go for facilitating more investment aiming to boost supply of essentials items," he said.
They said the new policy will enhance investment in productive sector and create more employment opportunities.
Bangladesh Bank Governor Dr Salehuddin Ahmed Thursday announced the monetary policy for July-December period of fiscal 2008-09 envisaging higher economic growth through continued expansion of credit to the productive sectors while keeping inflationary pressures under control.
Appreciating central bank's monetary policy, economist Professor Muzaffar Ahmed Friday said the new policy will encourage private sector investments, which will spur economic growth.
"I thank the central bank has been able to come out of IMF (International Monetary Fund) pressure and announce a pragmatic monetary policy," he said terming the new policy as "controlled expansionary monetary policy".
Prof Ahmed, however, said the policy is "pragmatic", but it might fuel inflation to some extent.
He said: "If the Bangladesh Bank fails to monitor its policy implementation strictly there is a possibility of hyper inflation or galloping inflation in the coming days."
"The government needs to be cautious in maintaining the consumption and import of different items at a tolerable level. It should encourage import of capital machinery and raw materials for more investment," he said.
President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Annisul Huq welcomed the monetary policy of the central bank and said: "The BB's initiatives to expand credit growth to the private sector are laudable. But we have to observe where the credit is going."
"If the credit goes into trading business instead of import of capital machinery and raw materials that will affect the economic growth," he said adding the central bank will have to ensure the flow of credit to the productive sectors.
Hailing the BB's courageous move Mr. Huq said the government's expansionary monetary policy might help boost the country's economic growth.
The IMF had asked the central bank to take a tight monetary policy to protect the country from global shocks and the economy from inflationary pressure.
Mr. Huq said: "If the infrastructure such as power and energy is not developed and quality of politics improved through a smooth transition the economic growth will be hampered much."
Khondkar Ibrahim Khaled, Bangladesh Krishi Bank chairman and former BB deputy governor, appreciated the BB's monetary policy and said: "If you consider the prevailing situation in the country the central bank's expansionary monetary policy is a right one."
"As the investment in the country is stagnant, food supply chain affected and employment opportunities shrunk, the new monetary policy will help boost investment and generate income of the people," he said
When asked whether the expansionary policy will raise inflation, the banker said: "Price factor is a major reason for inflation rather than the over supply of money. As there is inadequate investment and lack of business confidence, the supply chain has been hampered and income of the people squeezed. These are responsible for high inflation."
"As the country has been failing to check the inflationary pressure due to the global shocks, the government should go for facilitating more investment aiming to boost supply of essentials items," he said.