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POLITICAL UNREST

More dip in pvt sector credit growth

AKM Zamir Uddin

Credit growth in the private sector declined further in October as business people have adopted a ‘wait and see’ approach to expand their business by taking finance from banks due to the ongoing political unrest, said officials of the Bangladesh Bank.
According to the latest BB data, private sector credit growth declined to 11.04 per cent in October this year compared with that of 20.60 per cent in the corresponding month of last year.
The credit flow to the private sector stood at Tk 4,69,194.60 crore in October 2013 while it was Tk 4,22,538 crore in the same month of 2012. The figure was Tk 3,50,375.40 crore in October 2011.
In July this year, the private sector credit growth increased slightly after falling for straight 12 months, but the growth maintained a downward trend
in August to October consecutively due to the political unrest.
The year-on-year credit growth in the private sector was 11.61 per cent in July, 11.33 per cent in August and11.07 per cent in September.
The country has been facing a tremendous political turmoil in the last few months as the two major political alliances are yet to reach a consensus over the polls-time government which has ultimately hit the private sector, a BB official told New Age on Tuesday.
All kinds of economic activities in the country have come to a standstill due to political unrest which discouraged the business people to make fresh investment, he said.
Under the circumstances, the projected credit growth in the private sector set by the BB will not be achieved at the end of December, he said.
The BB set 18.50 per cent credit growth in the private sector for the first half of this fiscal year, but the growth stood at only 3.77 per cent between July and October, the BB data showed.
The credit growth in the private sector should have reached at least 10.33 per cent in the first four months of the FY 14, the official said.
Dhaka University economics department chairman MA Taslim earlier told New Age that it was a common phenomenon that credit growth in the private sector had declined in the recent months.
He explained that the private investment had collapsed in the last two years due to the government policies and the political unrest.
It is quite impossible to create a tempo in the investment sector if the existing political unrest does not stop immediately, Taslim said.
The business people think that the political uncertainty will deepen in the months to follow as the country’s two major political alliances are yet to reach any consensus over the next polls-time government, he said.
Taslim said that the overall macro-economic indicators would not be better in the current financial year as any country’s economy would not be able to get a tempo instantly after a crisis.
Amid political unrest, the private sector credit growth hit a 13-year low at 10.85 per cent in the last FY13.
The BB data showed that the credit growth in the overall domestic sector slumped to 10.78 per cent in October this year compared with that of 19.30 per cent in the corresponding month of 2012.
The total credit in the domestic sector in October stood at Tk 5,94,620.30 crore against Tk 5,36,764.80 crore in the same month of 2012.




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More dip in pvt sector credit growth

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