Private sector credit flow consistently decreasing

Mahfuja Mukul: The monetary policy for the current fiscal year 2022-23 has set a target of 14.10 percent of credit growth in the private sector till next June. However, in the first nine months of the financial year (July-March), credit growth is below the target. In other words, the credit disbursement in the private sector is continuously decreasing.
According to the latest report of Bangladesh Bank, at the end of March this year, the credit growth rate in the private sector stood at 12.03 percent. It was 12.14 percent at the end of the previous month, February. In the month of March, the credit status of the private sector stood at Tk 14 lakh 46 thousand 808 crores. In the same period of the previous year (March-2022) which was Tk 12 lakh 91 thousand 438 crores.
According to the data, the growth of credit in the private sector was 13.95 percent in July, the first month of the current financial year. It rose to 14.07 percent in August. However, it decreased slightly to 13.93 percent in September.
Then for two consecutive months (October and November) this growth of private sector loans was 13.91 percent. It fell further to 12.89 percent in December. However, in January, the seventh month of the fiscal year and the first month of this year, credit growth fell to 12.62 percent. In the next month, February, it further decreased to 12.14 percent. In the last month of March, this growth of credit to the private sector further decreased to 12.03 percent.
This growth in private sector credit is generally in the double digits. However, it was disrupted in November 2019. It fell to 9.87 percent for the first time in that month. However, after the impact of the global epidemic corona, it decreased at a large rate and fell to 7.55 percent in May 2020. This growth in private sector credit gradually increased from the following month, June.
Meanwhile, the dollar crisis in the country has become evident since March last year. The dollar reserves are decreasing. Currently, the country has usable reserves of $30.93 billion. Meanwhile, more than one billion Asian Clearing Union (ACU) import bills are to be paid this week. This will put additional pressure on reserves. As a result, after paying the Aku bill, the amount of reserves will drop to $29 billion. And the usable reserve of the country will be by excluding another $5.5 billion from the amount of reserves according to the International Monetary Fund (IMF). In this, the reserve can come down to $24 billion.
A senior official of the relevant department of the central bank said that various initiatives have been taken to bring relief to the global currency market, including the initiative to reduce the import liability. However, the crisis is not over. The pressure on the foreign exchange reserves will increase if the expenditure in other sectors including the sale of dollars is not reduced. Due to these reasons, the crisis in the economy is not ending.