Higher govt borrowing may crowd out private sector: DCCI

The central bank’s target to raise the public sector credit growth in the January-June half of the ongoing fiscal year may crowd out the private sector, said the Dhaka Chamber of Commerce & Industry (DCCI) today.

The credit growth target for the public sector has been adjusted upwards to 37.7 per cent from 36 per cent, according to the monetary policy statement (MPS) unveiled on Sunday. The actual credit growth was 26.6 per cent in the July-December period.

The goal for the private sector credit growth has been kept unchanged at 14.1 per cent, against an actual growth of 12.8 per cent in the first half of FY23.

“The target for public sector credit may cripple new borrowing and investment by the private sector,” said DCCI President Sameer Sattar in a press release. 

In order to reduce public sector borrowing, efficiency and good governance need to be continuously ensured through the reduction in government expenditure, austerity measures and prioritising development projects, he said.

The chamber, however, hailed the new monetary policy stance, saying it would help both the private and financial sectors turn around.

“As a whole, the MPS is promising with good indications to contain the current economic challenges,” Sattar said.

“However, a timely implementation strategy through coordinated efforts from the public and private sectors along with strong monitoring by the central bank can achieve the core goals of the money market and the economy.”