Bangladesh Bank has the rare distinction of being the only central bank in the world that has pursued inclusive growth as a consistent policy in recent years. It has assumed this role on its own volition without prodding from any quarter recognising the implicit writ of a central bank. In the process it has gone beyond the traditional responsibility for monetary stability and creating a conducive environment for overall growth. The core functions for Bangladesh Bank continue to be the same as those of other central banks. What has happened is integration of corporate social responsibility (CSR) with monetary policy statement (MPS) and supervision of the same. Through this transformation Bangladesh Bank has emerged as a development institution rising above the traditional regulatory jurisdiction. This new role required a confident departure from the past and pursuit of a vision that encompassed society, the polity and the economy. For an institution lacking much freedom of action and bound by tradition almost as a straight-jacket to envision a goal that is entirely new is a major feat of innovation. The ministry of finance in whose shadow the Bangladesh Bank has operated in the past deserves kudos for allowing the leeway that has enabled the Bank to break free from the hide-bound practices. This is the co-operative and mutually supportive relationship that is needed to achieve goals and attain objectives called for by the exigencies of the time. Society, the economy and the polity are all intertwined in Bangladesh, perhaps more than anywhere else and as such demands functioning by state agencies with multiple roles. No one understood this better and more acutely than the present governor of Bangladesh Bank. He is one of his kind at the moment at least, guided by personal convictions and spurred by vision for a future different from one that would not go beyond run-of-the-mill remit. His mission and zeal has won plaudits both at home and abroad.
Bangladesh Bank has recently unveiled a new five-year strategy aiming to achieve inclusive growth that combines price stability (the traditional function of central bank), gear up supervision (another traditional role) and push for sustainable development (a new emphasis). It is the last objective that embodies the essence of inclusive growth. It is predicated on the belief that development cannot be sustained unless it includes all cohorts of people and embraces an integrated plan of action within a multi-sectoral framework.
In disclosing the plan for 2015-2019 the governor of Bangladesh Bank said, "We have formulated the plan with importance on monetary policy." It is obvious that the Bank has relied on monetary policy to implement inclusive growth because this is the only tool at its disposal and also its main mandate. But while the focus is on monetary policy the strategy has been to expand its scope to embody the imperatives of inclusive growth. It is a novel and visionary use of the age-old monetary policy. The potential for its use in a wider spectrum was always there but few realised it and dared to put into practice.
This is the second time the Bangladesh Bank has published this kind of strategy paper. In 2009, it published the first strategy papers for the period 2010 to 2014. According to the Bank's source, despite various challenges 94 per cent of the targets set in the first plan have been achieved. A more detailed report on this would have been enlightening for those who are curious to know the outcome.
The areas new plan has prioritised are: balanced and coordinated monetary policy (traditional function), supervision and regulation for ensuring financial stability (also a traditional activity) and optimisation of human capital (a departure from tradition that qualifies the plan to be seen as 'inclusive'). In conformity with the traditional role the Bank's new plan has prioritised promoting a more liberal foreign exchange regime. For promotion of inclusive growth's new dimension the plan has emphasised socially responsible financing, enterprise resource management and effective communication and image building. Besides, it has taken into consideration sustainable eco-friendly economic growth. In addition, financial inclusion programme has been taken to include the low-income people in the financial sector.
The first strategic plan had set a target to transform Bangladesh Bank into a modern, farsighted and humane central bank, the governor said while inaugurating the second plan. Giving some idea about the achievement under the first plan for inclusive growth it was disclosed that financing has increased manifold in agriculture, small and medium enterprises (SME) and environment-friendly sectors. Farmers got the chance to open bank account with Tk. 10 and sharecroppers obtained credits from banks for the first time. Of course, Bangladesh Bank has always given emphasis on agricultural credit but this has been a big improvement on the past.
The new plan for inclusive growth has 14 goals, 105 objectives, 310 action plans and 395 key indicators to monitor performance. From this it appears that the plan is not only comprehensive but also detailed in terms of implementation procedures. These will provide an objective basis to know how far the targets set have been achieved. An in-depth analysis will indicate the positive aspects of the plan and highlight obstacles to inclusive growth. Bangladesh Bank has already the experience of implementing the first plan. It is expected that lessons learnt will be embedded into the strategy for implementing the second plan.
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