The traders and economists on Sunday brought allegations of “contradictory” steps from the Bangladesh Bank at the policy level.
They alleged that the central bank has increased the interest rate to curb the inflation rate and at the same time it is supplying money to the government by printing.
Habibur Rahman, the chief economist of the central bank, however, disagreed with them saying that the allegation of printing banknotes is not true.
These contradictory statements were put forth at a seminar titled ‘An overall assessment of Bangladesh’s economy in six months from the private sector’s point of view’. Dhaka Chamber of Commerce and Industries (DCCI) organised the seminar at its Motijheel office.
Prime minister’s economic affairs adviser Mashiur Rahman was the chief guest at the event that was chaired by DCCI president Ashraf Ahmed.
Addressing the seminar, DCCI’s former president Shams Mahmud said the private sector entrepreneurs are currently not getting the necessary amount of money from the banks. On the one hand, the central bank has raised the interest rate to curb the inflation rate, on the other hand, the Bangladesh Bank is printing banknotes to meet the government’s requirements. This is contradictory.
Senior economist at Policy Research Institute (PRI), a private research organisation, Ashiqur Rahman said at the seminar that defaulted loans are affecting the country’s private sector in a negative way. More than 22 per cent of the country’s debt is problematic.
He further stated that no visible progress has been made in raising the tax-GDP ratio in the country in the last 15 years. This has exerted an additional pressure on the state treasury. Because of this, the government was given money by printing.
But Habibur Rahman, the chief economist of the Bangladesh Bank, contradicted the observations.
He said many were there talking about printing banknotes but they came up with totally wrong statements without knowing the truth. The matter of printing money could be known from the central bank’s balance sheet.
Habibur Rahman informed the seminar that the size of the central bank’s balance sheet in the last six months (July-December) grew to Tk 372,315 crore (over Tk 3.72 trillion), which is 2.03 per cent less than the same time of the preceding year. That means the amount of money released in the market is less than the amount entered the vault of the Bangladesh Bank. This has been done keeping conformity with the contractionary monetary policy. That means the allegation that money is being printed is not true, he asserted.
In his keynote, DCCI president Ashraf Ahmed said the reduction in the private sector’s contribution to GDP is worrying. Apart from this, it is essential to decrease the cost of doing business to increase local and foreign investment, ensuring uninterrupted availability of energy at an affordable price and developing the supply sector. Besides, there is a possibility of reduction in the flow of loan in the private sector because of the steps the central bank has taken to control the inflation rate. That is why it is essential to coordinate those, he added.
Bangladesh Institute of Development Studies (BIDS) research director Mohammad Yunus also addressed the seminar.