Low private sector credit growth worsens job situation: BUILD

The downward trend in private sector credit growth would hit the employment situation further in the country, said Business Initiative Leading Development (BUILD) in a statement on Saturday.

The private sector think-tank expressed its concern yesterday on the Bangladesh Bank’s monetary policy statement (MPS) for the Fiscal Year 2022.

BUILD reacted to the expansionary and accommodative monetary policy with some specific steps to mitigate the damages done to economy by the pandemic.

The monetary policy eyed private sector credit growth at 11 per cent and 14.8 percent for the first and second half of FY22 respectively while public sector credit growth at 30.6 per cent and at 32.6 per cent respectively as per the written comment of BUILD.

The think-tank said banks have an excess liquidity of Tk 2.31 trillion at the end of June owing to a lackluster trend in private sector credit growth.

Under the circumstances, bank investment may divert to alternative sectors such as stocks and bond or even in real estate business, it added.

Referring experts, BUILD opined that asset bubble is apprehensive -- excess money with no dividends, and therefore, the situation has to be addressed with right earnestness by encouraging alternative investments for which service sector is a good option requiring policy support.

There are several policy supports extended by the Bangladesh Bank in respect of loan moratorium, extension of issuance period of L/C for import of essential goods, Credit Guarantee Scheme, Start-up Loans, Technology upgradation fund of Tk 1,000 crore, extension of EDF and so on, reads the statement.

Unfortunately, the investment situation is not improving owing to low credit growth in the private sector; broad money supply has been reduced, which is described by the central bank as one of the reasons of containment of the inflation rate. 

The Monetary Policy Statement also mentioned that about Tk 1.35 trillion with 28 stimulus packages have been announced by the government to contain the impact of pandemic, however, the disbursement of the fiscal incentives to the required areas is limited.

BUILD observed that many entrepreneurs especially CMSMEs could not get support from these packages, and therefore, special attention need to be paid to them.

A significant number of micro, cottage and small entrepreneurs owning informal businesses bear the brunt of pandemic.

The Bangladesh Bank policies to support these segments need to be more comprehensive, BUILD suggested.

The country needs to promote investment and ensure maximum utilisation of the existing stimulus packages as well as Credit Guarantee Schemes for immediate rescue of CMSMEs.

It called up on the government to announce a specific 2nd round of such rescue package with an allowance for new employment as well as retention of employment for encouraging investors.