President of Dhaka Chamber of Commerce & Industry (DCCI) Barrister Md. Sameer Sattar today said that the just unveiled Monetary Policy Statements (MPS) for the January-June period of FY23 would help both the private and financial sector to turn around.
He said this MPS is primarily aimed at curbing inflation and to stabilize the foreign exchange reserve.
Sameer said this in the wake of the declared Monetary Policy for the January-June period of 2023 given yesterday by the Bangladesh Bank.
He said the public sector credit growth has been set by the government at 37.7 percent for January-June of FY23, which was 26.6 percent in June-Dec FY22, said a press release.
The DCCI President said the set target for public sector credit might cripple new borrowing and investment by the private sector.
“In order to reduce public sector borrowing, efficiency and good governance needs to be ensured continuously through reduction in government expenditure by way of austerity measures and prioritizing between development projects,” he said.
Also, in the current market condition, he said the proposed relaxation of lending rate cap for consumers’ credit and complete removal of the deposit floor rate may encourage savings and thus make smooth the liquidity reserve of banks.
Regarding the exchange rate stability, Sameer said the Bangladesh Bank hopes to gradually move towards a market-based, flexible and unified exchange rate regime by the end of this fiscal year.
In order to avoid trade-based money siphoning, he supported the decision of the Bangladesh Bank to beef up its monitoring to track import LCs before making any final payment.
“Also, it will be helpful to pre-inspect any LC which is worth $3 million or more,” he added.
However, in the given economic scenario, the DCCI President suggested relaxation of L/C margin for essential commodities and industrial materials for catering local and export-oriented industries.
Regarding control of inflation, the MPS has addressed some key issues especially relating to CMSMEs.
Sameer hailed the initiative of the Bangladesh Bank with regards to the re-finance scheme of more than Taka 50,000 crore, prioritizing investments in agriculture, CMSMEs and import substituting industries allowing them to avail term loans and working capital loans at easier terms and conditions.
“It will certainly help the quick revival of CMSMEs,” said Sameer.
Barrister Sameer opined that stern measures for quick loan recovery should be brought into place. In this connection, the Bangladesh Bank can identify and pinpoint the exact reasons, focusing on habitual defaulters, and start engaging with various institutions and stakeholders.
These efforts would result in working towards reducing the current backlog in recovery cases along with quick reforms to the existing laws by introducing ADRs in an effective manner.
Sameer also hailed the decision of the Bangladesh Bank to establish Special Monitoring Cell for continuous review and oversight of big loans as part of a comprehensive NPL resolution mechanism.
Regarding inward remittance from wage earners, he said the move of waiving documentary requirements in relation to remitting foreign exchange and money transfer fees by local banks as well as prior approval for withdrawal of money mentioned in the MPS are welcoming.
As a whole, Sameer said the declared MPS is promising with good indications to contain the current economic challenges.
“However, a timely implementation strategy through coordinated efforts from the public and private sector along with strong monitoring by the central bank can achieve the core goals of the money market and economy.”