BB to unveil monetary policy tomorrow

For years, animal fat market in the country remains untapped, a realisation of which is certain to benefit industries requiring such fat as a manufacturing ingredient, plus create a bevy of employments.

No such statistics is available for the sector being entirely informal in nature.

According to business insiders, over 1,000 tonnes of animal fat are generated in the country per year, half of them alone during Eid ul-Azha.

According to the Ministry of Fisheries and Livestock, around 90,93,242 cattle were sacrificed during this Eid that are a big source of animal fat.

From fat collectors to factory owners who use the substance for a series of products like soap, candle, fish feed, etc, everyone involved in the process deserves admiration as they lend their hand not only to the human needs but also to help a large segment of low-income group -- some 2-3 lakh people -- earn a living.

However, a thriving business potential is virtually left in the lurch that requires policy support and initiatives.

Though it is not wholesome to consume animal fat, this apparently left-out byproduct becomes the building block for soap and other manufacturing industry.

Of the industries recognised for using animal fat more in an extent, soap is one.

Sources said soap factories located in Dhaka, Chattogram, Narayanganj, Cumilla, Bagura, Rangpur, Savar and Kishorganj refine animal fat to manufacture soap.

BB will be careful to ensure that surplus liquidity created by the expansionary policy would not be channelled towards unproductive sectors. It has instructed banks to remain alert so that stimulus fund, disbursed to revive businesses hit by the pandemic, do not get diverted to unproductive sectors like stock market, purchasing fixed assets such as land or apartments.

The government has targeted a 7.2 per cent growth of GDP, the sum of the nation’s goods and services, and expected to keep the inflation rate within 5.3 per cent in FY 2021-22.

Senior BB officials said the monetary policy has been formulated with a view to achieving those goals.

In the MPS for FY22, BB may keep the private sector credit growth target unchanged considering the possibility of restoration of normal economic activities, overcoming the COVID-19 impact.

In the MPS for the just-concluded fiscal year, the central bank kept its projection of attaining 14.8 per cent growth in private sector credit even though the growth rate in reality dropped to 7.55 per cent in May amid the pandemic.

The target of government borrowing from the banking sector for the last fiscal year was 44.4 per cent. But in February of the just-concluded fiscal year, the target was slashed to 31.7 per cent.

However, the government did not borrow more from the banking sector as it borrowed more from savings certificates.

The expansionary monetary policy was announced by the central bank in July last year and slow private sector credit growth pushed excess liquidity in the banking sector.

At the end of April this year, excess liquidity in the banking sector stood at Tk 2,01,546 crore, BB data showed.

“Monetary policy should be expansionary like the previous fiscal year but the excess liquidity in the banking sector should also be controlled,” said Ahsan H Mansur, executive director of Policy Research Institute of Bangladesh and chairman of Brac Bank. The surplus liquidity in the banking sector is creating a huge interest burden for the banks, he said.

“Monetary policy should be balanced with the fiscal policy,” said former BB governor Salehuddin Ahmed. “The MPS should put emphasis on labour-intensive industries for employment generation and the monetary policy statement must contain easy guidelines for Small and Medium Enterprises.”