Cautionary MPS likely to stabilize forex reserve, contain Inflation: DCCI President

Business Desk :
President of Dhaka Chamber of Commerce & Industry (DCCI) on Wednessday expressed his optimism that the new monetary policy for the 2nd half (January-June) of FY24 would be helpful for stabilization of the macroeconomic condition through its implementation.

In response to the monetary policy announced by the Bangladesh Bank on Wednesday, the DCCI hailed BB’s strategy of highlighting the need for ensuring sufficient liquidity to nurture growth sectors while trying to rein in inflation.

In this context, while increasing the public sector borrowing is necessary, the DCCI noted care must be taken to avoid crowding out the private sector from domestic liquidity, said a press release.

The public sector credit growth target has been set at 27.8% for January-June of FY24, which was realized at 18% against the target of 37.9% in July-December of FY24.

On the other hand, the private sector credit growth has been set by the government at 10% for January-June of FY24, which was realized 10.2% against the target of 10.9% in July-December FY24.

The DCCI urged the central bank to explore more options for increasing liquidity for the domestic banking system and private sector credit growth over the next six months.

In this regard, Dhaka Chamber President Ashraf Ahmed sought additional measures to increase credit flow to the private sector by an appropriate financial borrowing strategy.

Focus on enhancing availability of trade credit, use of contingents, factoring etc. may be considered as alternatives to reduce foreign exchange stress as well as increase liquidity, he added.

Ashraf Ahmed hailed Bangladesh Bank for extending support to CMSMEs through pre-financing and re-financing schemes, which should contribute towards nurturing growth sectors.

The increase in repo rate by 25 basis points to 8% is likely to impact money supply, and can impact banking liquidity available for private credit.