Kazi Zahidul Hasan :Bangladesh Bank (BB) will unveil the monetary policy statement (MPS) for the first half of the current fiscal (2016-17) on Tuesday, focusing on higher GDP growth with adequate credit flow to the productive sectors.BB has already held discussions with representatives of different sectors, leading economists, former central bank governors for the formulation of forthcoming monetary policy.Governor Fazle Kabir will unveil the MPS at 11am at the BB headquarters in the capital. “The new monetary policy will introduce a host of measures for achieving inclusive economic growth, taming inflation and maintaining price and exchange rate stability in line with the government’s budgetary targets,” BB Chief Economist Biru Paksha Paul, told The New Nation yesterday.He said: “It will also ensure adequate liquidity supply in the financial system so that banks can lend to the productive sectors to support economic growth and employment generation”.Earlier, the government has set the GDP growth target for the current fiscal year at 7.2 percent and inflation within 5.8 per cent.When asked, Biru Paksha Paul hinted for narrowing the central bank’s policy rate corridor so that banks can park excess funds with it.The central bank on January 14 this year unveiled the MPS for the second half of the past 2015-16 (FY16) financial year focusing on higher growth with lower inflation. In the last MPS, BB projected GDP growth rate at 6.8 to 6.9 percent and inflation at 6.2 percent for FY16, ending in June 30.Economists, however, of the view that the central bank should maintain the credit growth momentum in the next monetary policy setting the policy stance as ‘expansionary.’ At the same time, they said, BB should also keep the global developments in mind following Britain’s exit from the EU while announcing the new monetary policy.”The focus on the next monetary policy should be on maintaining the momentum of private sector credit growth. Productive sectors should be allowed to get necessary credit to support the economic growth,” Dr Salehuddin Ahmed, a former BB governor told the New Nation on Sunday.He said BB should also take measures to ensure adequate credit flow to the SME sector for boosting manufacturing activities. “On top of this, a coherent between the monetary and the fiscal policies is must to ensure the government prudent economic management,” he said.When asked, Dr Salehuddin Ahmed said, “Taming inflation is a key task for the monetary policy and I hope the task would not face much challenge due to falling commodity prices”. “The monetary policy should be formulated focusing on prevailing macroeconomic conditions,” Dr Zahid Hussain, lead economist, the World Bank’s Bangladesh Country office, told The New Nation on Sunday.The highest priority in the new policy should be given ensuring the quality of credit rather than adequate money supply in the market, he added. “An effective monetary policy will largely depend on how BB ensure credit to productive sectors as well prevent bank’s unnecessary lending to unproductive purpose,” said Dr Zahid.
