Bangladesh Bank (BB) will unveil its monetary policy statement (MPS) for the current fiscal year on Wednesday (Wednesday), aiming to revive the corona-ravaged economy of the country.
Each year the BB announces its monetary policy statement through a press conference. But this year the BB has decided to issue the statement on its website due to the COVID-19 pandemic.
The country’s economic activities were halted for around two months from March 29 to May 30 when it went into a shutdown.
Though the government withdrew the countrywide shutdown on May 31, economic activities are yet to get pace as most businesses have either suspended their operations or have resumed activities only partially.
This year the BB will announce an expansionary monetary policy to revive the struggling economy, according to BB Executive Director and spokesperson Md. Serajul Islam.
Md. Serajul Islam said the money supply target would be set at a rate supportive of achieving GDP growth and inflation targets for the current fiscal year.
The government has set the GDP (gross domestic product) growth target at 8.2% and aims to keep inflation within 5.4% for the current 2020-21 fiscal year.
The BB aims to set a higher private sector credit growth target in the monetary policy statement for FY21, although the growth of private sector credit went down to 8.61% in June of the concluding fiscal year against the target of 14.8% for the fiscal year.
The monetary policy will be expansionary because the government has already announced several stimulus packages to recover from the fallout of the economy. The packages are being implemented through different banks, added the BB spokesperson.
The BB began announcing the monetary policy statement once a year from the fiscal year of 2019-20. However, former Bangladesh Bank governor Salehuddin Ahmed has said the monetary policy should not be announced for the entire fiscal year, but rather for six months.
Previously, the BB used to declare the monetary policy statement twice in a financial year.
In the first week of this month, the BB sought the opinions of stakeholders on the formulation of the MPS.
Talking to Dhaka Tribune, Salehuddin Ahmed said re-generating the economy was the key challenge for the upcoming MPS in fiscal year 2020-21. Monetary policy should be balanced with the fiscal policy, he added.
The MPS should emphasize labour intensive industries for employment generation and the monetary policy statement must contain easy guidelines for Small and Medium Enterprises (SME) loans, the former BB governor noted.
Monetary policy should be expansionary, but checking inflation, especially food inflation, should be vital, said Ahsan H Mansur, executive director of Policy Research Institute of Bangladesh.
