BB Governor announces new monetary policy

DHAKA, Bangladesh, July 18 (BSS)- Bangladesh Bank Governor Dr Salehuddin Ahmed today announced an expansionary monetary policy for the July-December period of the current calendar year and said the
policy will focus on restraining inflation and helping accelerating targeted budgetary growth.

"It aims at ensuring price stability, sustaining higher
growth, protecting the economy from escalating global prices of
essentials, financial troubles and other downward risks," he said

Presenting the policy in the conference room the central
bank, the governor said the new plan would extend support to
tapping new economic opportunities while discouraging the use of
resources in unproductive sectors.

The deputy governors and other senior officials of the
central bank were also present on the occasion. The governor said
the monetary policy in the forthcoming months will remain
essentially expansionary to support accelerated economic
activities for creating new jobs and income for the common
people.

He said inflation in the country is partly imported from the
high cost of commodities in the international market. He said
there is hardly any scope of prices coming down in the global
market and LDCs like Bangladesh will continue to face its impacts
along with the effects of lower growth in the developed
economies.

The global factors coupled with political developments link
to elections may remain a major risk to growth, he said
predicting inflation may remain at 9.0 percent during this time.
The policy will support attaining the 6.5 percent growth, this
year.

He said the central bank policy will continue to support
higher growth in agricultural, industrial and the service
sectors. The increase in the prices of fuel and fertilizer is yet
to make any impact on inflation, he said and added that the
government policy will be able to minimize it.

Referring to huge increase in imports, he said exports grew
by 15.3 percent during July last year to May this year. The
steady export earnings coupled with huge remittances has allowed
the government to settle the import bills.

On an increased demand for credit in the private sector, Dr
Salehuddin Ahmed said the new policy would not allow unproductive
utilization of credit and prevent the use of money in speculative
business.

It will monitor the over-valuation of capital goods,
immovable property, high ceiling of L/Cs against import of motor
vehicles and the undue increase of circulation of currency.

He said the economy has remained under-performed and it
should achieve potentiality to help the country reducing the
impact of high cost of commodities in the global market.

Referring to a common suggestion that a contractionary
monetary policy will be able to contain inflation, he said its
discouraging impact on job creation and income creation may
outweigh the gains otherwise.

He said agriculture, small and medium enterprises and self-
financing housing projects will continue to get the central bank
support. Moreover, all socially desirable business sectors
including ship building, renewable energy projects, waste
disposal projects of industries will get renewable financing.

Referring to escalating import bills of fuel, he said we must
make every effort to increase the export of manpower to oil rich
countries, which sell oil to Bangladesh. This is one way of
supplementing the oil bills, he said.

He said the central bank has introduced forward heading
facility to encourage import of essentials and discourage
unnecessary imports. He said the bank will not take any step
which may affect the flow of credit to the private sector in
meeting its productive requirement..