Published in Bangladesh Today on Monday, 27 January 2014.
Atiur to announce new MPS to help reshape economy
The World Bank and the CPD put the GDP growth forecast below 6.0 percent for FY14. Finance Minister Abul Maal Abdul Muhith also revised down the GDP growth target to 6.3 percent from the fiscal target of 7.2 percent.
Economists believe Dr Atiur would face challenges to help maintain a healthy GDP growth with the monetary policy approach, which primarily aims at ensuring effective credit flow to private sector and managing inflation at a comfortable level. The governor is announcing the MPS at 3 pm on Monday at a press conference at the Bangladesh Bank (BB)’s headquarters, situated in the heart of the country’s prime commercial hub Motijheel, overlooking the concrete sculpture of the national emblem “Shapla” (water lily).
Last year the Shapla square saw a shocking street agitation in the name of politics and unfortunately such ruinous political programme, sponsored by the BNP-led opposition alliance, continued until few weeks ago, denting the economy to a grievous extent.
Centre for Policy Dialogue (CPD), the county’s leading think- tank, estimates that the shutdown and blockade in the past six months cost the country over Taka 49,000 crore, which is equivalent to 4.7 percent of the gross domestic product (GDP).
The colossal losses to the insensible political programme already ate up the prospect of the GDP growth, which reached a record high of 6.7 percent only three years ago during 2010-11 financial year when political situation was stable.
The country maintained a comparatively steady GDP growth in the subsequent two financial years after the record high in 2011. The GDP grew by 6.2 percent in 2011-12 and 6.0 percent in 2012-13 fiscal years. But, the economists apprehend slower GDP growth for this current fiscal year only because of inconsiderate countrywide strike and blockade over the past few months.
The central bank’s economic adviser, Dr Md Akhtaruzzaman, told BSS earlier that one of the major focuses of the new MPS would be expansion of the private sector credit, but with a balanced policy approach.
The MPS for July-December 2013 cut the private sector credit growth to 15.5 percent till December 2013 and 16.5 percent till June 2014 from 18.5 percent of January-June of 2013 only to arrest soaring inflation during this period.
Trade bodies argued the lowered credit growth claiming that it would hamper necessary investment, required to achieve GDP growth. However, there is a concern that the credit flow to private sector would put extra pressure on inflation that already started inflating due to food price hike.
The inflation rose to 7.35 percent in December as food prices increased due to opposition’s repeated strikes and blockades. The challenge for the central bank would be keeping the inflation under control while credit flow should be unhindered to help trade and business recover the losses to political unrest.
Besides the GDP and inflation, the central bank would face another challenge in keeping local currency stable against greenbucks. Some economists are worrying about lower export earnings and remittance inflow in the next six months fearing further political unrest.
The export earnings and remittance grew steadily in the past six months when reserves crossed $18-billion mark for the first time despite the political crisis.
Published in News Today
Dr Atiur to announce Monetary Policy today
New policy to help reshape economy
News Report Bangladesh Bank is going to unveil its second half monetary policy of the current fiscal year (2013-2014) today (Monday). The central bank governor Dr Atiur Rahman will unveil the monetary policy at the Bangladesh Bank’s Jahangir Alam conference hall 3pm.
On July 25 last, the central bank announced its first half monetary policy assuring that the government bank borrowing will not disrupt credit supply to the private sector in boosting investment. However, the investment, both domestic and foreign ones, did not get momentum following political instability over the January 5 national election.
When Governor Dr Atiur Rahman is set to announce the Monetary Policy Statement (MPS) for the second half of the current 2013-14 (FY14) financial year, many economists suggest it is going to be a tough job for him to help reshape the dented economy with the central bank’s flagship policy support.
Centre for Policy Dialogue (CPD), the county’s leading think- tank, estimates that the shutdown and blockade in the past six months cost the country over Taka 49,000 crore, which is equivalent to 4.7 percent of the gross domestic product (GDP).
The colossal losses to the insensible political programme already ate up the prospect of the GDP growth, which reached a record high of 6.7 percent only three years ago during 2010-11 financial year when political situation was stable.
The country maintained a comparatively steady GDP growth in the subsequent two financial years after the record high in 2011. The GDP grew by 6.2 percent in 2011-12 and 6.0 percent in 2012-13 fiscal years. But, the economists apprehend slower GDP growth for this current fiscal year only because of inconsiderate countrywide strike and blockade over the past few months.
The World Bank and the CPD put the GDP growth forecast below 6.0 percent for FY14. Finance Minister Abul Maal Abdul Muhith also revised down the GDP growth target to 6.3 percent from the fiscal target of 7.2 percent.
Economists believe Dr Atiur would face challenges to help maintain a healthy GDP growth with the monetary policy approach, which primarily aims at ensuring effective credit flow to private sector and managing inflation at a comfortable level.
The central bank’s economic adviser, Dr Md Akhtaruzzaman, told BSS earlier that one of the major focuses of the new MPS would be expansion of the private sector credit, but with a balanced policy approach. The MPS for July-December 2013 cut the private sector credit growth to 15.5 percent till December 2013 and 16.5 percent till June 2014 from 18.5 percent of January-June of 2013 only to arrest soaring inflation during this period.
Trade bodies argued the lowered credit growth claiming that it would hamper necessary investment, required to achieve GDP growth. However, there is a concern that the credit flow to private sector would put extra pressure on inflation that already started inflating due to food price hike.
The inflation rose to 7.35 percent in December as food prices increased due to opposition’s repeated strikes and blockades. The challenge for the central bank would be keeping the inflation under control while credit flow should be unhindered to help trade and business recover the losses to political unrest.
Besides the GDP and inflation, the central bank would face another challenge in keeping local currency stable against greenbucks. Some economists are worrying about lower export earnings and remittance inflow in the next six months fearing further political unrest.
The export earnings and remittance grew steadily in the past six months when reserves crossed $18-billion mark for the first time despite the political crisis.
The high remittance coupled with steady export earnings and remittance inflow made the local currency stronger against the US dollar. But, the local currency taka would face depreciation if remittance and export earnings decline. In that case, intervention of the central bank would be necessary to ensure orderly depreciation of taka to protect the interest of domestic trade and business, but the intervention would cost reserves.
Published online on BSSnews.net
Atiur to announce new MPS to help reshape economy
DHAKA, Jan 26, 2014 (BSS) – When Governor Dr Atiur Rahman is set to announce the Monetary Policy Statement (MPS) for the second half of the current 2013-14 (FY14) financial year, many economists suggest it is going to be a tough job for him to help reshape the dented economy with the central bank’s flagship policy support.
The governor is announcing the MPS at 3 pm on Monday at a press conference at the Bangladesh Bank (BB)’s headquarters, situated in the heart of the country’s prime commercial hub Motijheel, overlooking the concrete sculpture of the national emblem “Shapla” (water lily).
Last year the Shapla square saw a shocking street agitation in the name of politics and unfortunately such ruinous political programme, sponsored by the BNP-led opposition alliance, continued until few weeks ago, denting the economy to a grievous extent.
Centre for Policy Dialogue (CPD), the county’s leading think- tank, estimates that the shutdown and blockade in the past six months cost the country over Taka 49,000 crore, which is equivalent to 4.7 percent of the gross domestic product (GDP).
The colossal losses to the insensible political programme already ate up the prospect of the GDP growth, which reached a record high of 6.7 percent only three years ago during 2010-11 financial year when political situation was stable.
The country maintained a comparatively steady GDP growth in the subsequent two financial years after the record high in 2011. The GDP grew by 6.2 percent in 2011-12 and 6.0 percent in 2012-13 fiscal years. But, the economists apprehend slower GDP growth for this current fiscal year only because of inconsiderate countrywide strike and blockade over the past few months.
The World Bank and the CPD put the GDP growth forecast below 6.0 percent for FY14. Finance Minister Abul Maal Abdul Muhith also revised down the GDP growth target to 6.3 percent from the fiscal target of 7.2 percent.
Economists believe Dr Atiur would face challenges to help maintain a healthy GDP growth with the monetary policy approach, which primarily aims at ensuring effective credit flow to private sector and managing inflation at a comfortable level.
The central bank’s economic adviser, Dr Md Akhtaruzzaman, told BSS earlier that one of the major focuses of the new MPS would be expansion of the private sector credit, but with a balanced policy approach.
The MPS for July-December 2013 cut the private sector credit growth to 15.5 percent till December 2013 and 16.5 percent till June 2014 from 18.5 percent of January-June of 2013 only to arrest soaring inflation during this period.
Trade bodies argued the lowered credit growth claiming that it would hamper necessary investment, required to achieve GDP growth. However, there is a concern that the credit flow to private sector would put extra pressure on inflation that already started inflating due to food price hike.
The inflation rose to 7.35 percent in December as food prices increased due to opposition’s repeated strikes and blockades. The challenge for the central bank would be keeping the inflation under control while credit flow should be unhindered to help trade and business recover the losses to political unrest.
Besides the GDP and inflation, the central bank would face another challenge in keeping local currency stable against greenbucks. Some economists are worrying about lower export earnings and remittance inflow in the next six months fearing further political unrest.
The export earnings and remittance grew steadily in the past six months when reserves crossed $18-billion mark for the first time despite the political crisis.
The high remittance coupled with steady export earnings and remittance inflow made the local currency stronger against the US dollar. But, the local currency taka would face depreciation if remittance and export earnings decline.
In that case, intervention of the central bank would be necessary to ensure orderly depreciation of taka to protect the interest of domestic trade and business, but the intervention would cost reserves.