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Unrest sends pvt sector credit growth to 14yr low in Dec

AKM Zamir Uddin

Private sector credit growth hit a 14-and-a-half-year low at 10.60 per cent in December last year due to political unrest, poor infrastructure and unfriendly policies, said experts.
According to the Bangladesh Bank data released on Thursday, the credit growth in the private sector slumped to 10.60 per cent in December 2013 compared with that of 16.61 per cent in the same month of 2012.
A BB official said that the central bank’s monetary policy for July-December of 2013 had failed completely to make the investment sector vibrant as the achieved credit growth in the private sector in December was far below the central bank’s target of 15.50 per cent.
The BB data showed that the private sector had posted a credit growth of 10.75 per cent in the FY 2000.
The credit growth data for the private sector before the fiscal year 1999-2000 is not available in the BB record book.
The credit flow to the private sector stood at Tk 4,78,766.50 crore in December 2013 against Tk 4,32,892.40 crore in the same month of 2012.  It was Tk 3,71,243.30 crore in December 2011.
The violent political conflicts in the last several months among the major political parties over the process of holding general elections has hit the private sector, the BB official said.
Under the circumstances, the projected credit growth in the private sector set by the BB was not achieved at the end of December, he said.
Centre for Policy Dialogue executive director Mustafizur Rahman told New Age on Thursday that all kinds of economic activities in the country had come to a standstill in November and December of the last year due to political unrest which discouraged the business people to make fresh investment.
Against the backdrop, a number of businesses had to close their organisations, putting an adverse impact on the country’s financial sector, he said.
He said, ‘The growth in the term loans in the first quarter of the FY14 also posted a negative growth due to the political unrest.’
He, however, hoped that the credit growth in the private sector would increase in the months to come.
Former BB governor Salehuddin Ahmed said that the government had failed in the last few years to gave proper policy support to the businesspeople resulting that private sector credit growth hit a 14 and a half years low at 10.60 per cent in December, 2013.
The government also failed to upgrade the required policy for the private sector in a bid to boost the investment, he said.
The existing infrastructure problem is another vital cause of the declining trend in the private sector credit growth, he said.
The business sector are now facing major setback due to the infrastructure crisis, he said.
The recent political turmoil has fuelled the overall crisis in the private sector, he said.
Due to the political uncertainty, the businesspeople have adopted a ‘wait and see’ approach to make fresh investment, he said.
The BB data showed that the credit growth in the overall domestic sector slumped to 10.80 per cent in December 2013 compared with that of 14.30 per cent in the corresponding month of 2012.
The total credit in the domestic sector in December stood at Tk 6,05,969 crore against Tk 5,46,902 crore in the same month of 2012.
The BB official said the government had significantly declined its borrowing from the banking sector in the first half of the FY14 due to a slower pace in implementation of annual development programme amid political unrest.
For this reason, the domestic credit growth declined along with the private sector, he said.




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