FY21 monetary policy is a conventional one with just numbers, figures

The policy for fiscal year 2020-21 is a conventional one. It has just numbers and figures. The majority of the measures of the expansionary monitory policy have already been taken in March and April this year, and the policy comes as it was expected.

The recently taken policies of the central bank would increase money flow, but cautious utilisation of money would be vital. Otherwise, people may invest their money in non-productive sectors.

Even through the central bank has identified the challenges, the monetary policy lacks specification of measures which would be taken to mitigate the challenges.

The Bangladesh Bank projected a much higher private sector credit growth target for fiscal year 2020-21 than the actual 8.61 percent growth in the immediate past fiscal year 2019-2020. For the first half, growth target was set at 11.5 percent.

The policy would not impact much. The central bank could have mentioned how the banks would be encouraged to issue credit to the small and medium enterprise (SME) sector as the 9 percent ceiling on lending rate had made it difficult for the banks to issue credit to the SMEs.

Dr Salehuddin Ahmed is the former governor of the Bangladesh Bank