Economic Reporter :
Unnayan Onneshan (UO), an independent multidisciplinary think-tank, said that the recently announced monetary policy statement (MPS) by Bangladesh Bank for the first half of the FY 2016-2017 is as an typical policy in exceptional economic circumstances.
The research organization reveals that the policy statement does not address the issue of weak banking and financial structure which is, as noticed in recent times, characterized by fraudulence, lax oversight, scam and illicit capital flight, disorganization, and captured governance.
Referring to stagnant private investment, the think-tank says that recent growth in private sector credit fails to boost private investment.
Lack of business confidence in the economy coupled with recent rise in the incidence of terrorist attacks is likely to cause the stagnation to intensify, it said.
Unnayan Onneshan pointed out that private investment has been remaining stagnant and has stood at 22.07 percent of GDP in FY 2014-15 and 21.78 percent in FY 2015-16, while increase in public investment from 6.82 percent in FY 2014-15 to 7.6 percent in FY 2015-16 has not succeed to create much needed crowding in for private investment.
The country needs to increase employment opportunities by two percent in order to enter the middle income group by 2021, it added.
Referring to increasing illicit capital outflow from Bangladesh, the research organization finds that during 2004-2013, illicit capital outflows amounted to USD 5587.67 million every year on average.
The research organization shows that twelve-month average consumer price index (CPI) inflation has assumed a slowly declining trend for the last couple of years.
Average inflation came down to 5.92 percent in June 2016 from 7.28 percent in July of 2014. Food inflation dropped to 4.90 percent in June 2016 from 8.55 percent in July 2014 while nonfood inflation rose from 5.41 percent in July 2014 to 7.47 percent in June 2016. Core inflation that excludes both food and fuel components rose from 6.29 percent in July 2015 to 8.04 percent in June 2016.
Referring to persistent deterioration in the financial portfolio of the state-owned banks, the research organization shows that the government allocates Tk. 2000 crore as investment for recapitalization in the budget of the FY 2016-17. This allocation implies inefficient use of public money as the investment for recapitalization seems to validate the disorganization and ineptitude in the sector.
