The Dhaka Chamber of Commerce & Industry (DCCI) has expressed concern over Bangladesh Bank's decision to maintain a contractionary monetary policy in the second half of FY2024-25. The policy includes keeping the policy rate at 10%, which, while aimed at curbing inflation, is seen as a hindrance to private sector growth and overall economic expansion.
DCCI highlighted that the private sector, which relies heavily on bank financing for investment, is grappling with increased production costs due to high interest rates. These rising costs, the Chamber warned, could exacerbate inflationary pressures instead of alleviating them. Although inflation eased to 9.94% in January 2025 from 10.89% in December 2024, it remains significantly above the desired level.
The Chamber also expressed dismay at the decision to maintain the private sector credit growth target at 9.8% for January–June FY2024-25, especially when actual growth fell to 7.3% in early 2025, marking the lowest rate in 12 years. Meanwhile, public sector credit growth surged to 18.1% in December 2024, well above the 14.2% target. DCCI recommended austerity measures to curb excessive public sector borrowing and redirect resources toward the private sector to restore business confidence and operational viability.
DCCI urged Bangladesh Bank to implement sector-specific funds and entrepreneurial support programs to stimulate private sector credit flow. The Chamber warned that without such interventions, restrictive monetary policies risk driving the economy into stagnation.
Additionally, DCCI criticized the central bank for not adequately addressing discrepancies in the market-based exchange rate system. Exporters and importers reportedly face higher US dollar costs due to varying rates, a problem the Chamber emphasized must be resolved for consistency and to benefit traders and remitters alike.
The DCCI also called for stronger governance in the banking sector, noting rising liquidity crises and non-performing loans (NPLs). While the adoption of the Expected Credit Loss (ECL) methodology under IFRS 9 by 2027 is seen as a positive step, the Chamber expressed concerns over the slow pace of governance reforms and the lack of legal resolutions for banking sector vulnerabilities.
To ensure macroeconomic stability and foster a conducive environment for investment, the DCCI urged Bangladesh Bank to adopt a more flexible and balanced monetary policy. By closely monitoring the policy’s impact on inflation and economic growth, and by implementing targeted measures to boost credit flow, the Chamber believes Bangladesh can achieve sustainable growth in the coming years.
