In the first eight months of the fiscal year 2021-27, the bank's loan flow has been severely stagnant in the private sector. According to the latest data of Bangladesh Bank, the bank's loan flow has increased by only 2.5 percent at this time, which is about half compared to the same period (5.5 percent) last year and the lowest in the last 20 years. At the end of June 2021, the total loan in the private sector was Tk 1.5 lakh crore, which increased to Tk 1.5 lakh crore in February. Experts say political uncertainty and the weakness of the investment environment are having a negative impact on the loan flow. If there is no stability, entrepreneurs lose interest in new investment.
According to economists, this growth is not a real loan, but with the increase in interest rates and the addition of suspended interest, the total debt has increased slightly. High interest has increased the cost of business, whose pressure is the highest on small and medium entrepreneurs.
Sanem Executive Director Dr. Selim Raihan told the Bangla Tribune, “High interest is discouraging investment, the risk of defaulted loans is increasing and growth is slowing down.” According to him, the strict monetary policy failed to control inflation, but the private sector has increased the crisis.
Banks are leaning on government bonds
In this situation, banks are leaning on safe profits – government treasury bills and bonds, where interest rates are 5 to 5 percent. As a result, the interest of lending to the private sector has decreased. At the same time, political uncertainty and the weakness of the investment environment are also having a negative impact on the loan flow.
Mutual Trust Bank Managing Director Syed Mahbubur Rahman said, “If there is no stability, entrepreneurs lose interest in new investment. Rather, it is the main goal to maintain the existing business. '
Collapse in imports, disrupt production
According to the data of Bangladesh Bank, the total imports increased by 5.7 percent during the July-February of the fiscal year 2021-27, but at the same time, the import of capital equipment has decreased by 26.12 percent. The same image in importing raw materials and intermediate products. Until March, LC opening data analysis showed that the LC was reduced to the import of petroleum, intermediate Goods and machinery.
According to experts, this contraction is a terrible signal for industrial production. Due to the lack of equipment and raw materials, production is being disrupted, many factories are running below the capacity, even some factories are closing.
Collapse in debt flow, investing in investment
At the end of February this year, the total loan growth in the banking sector was only 8.12 percent, the lowest after 20. Entrepreneurs are refraining from new investment due to interest rates of 5 to 5 percent and uncertainty in the market. As a result, the existing business is also challenging.
Asked about this, Bangladesh Chamber of Industries President Anwar-ul-Alam Chowdhury Pervez told the Bangla Tribune, “If the law and order situation is not improved, the lack of fuel is not cut and the interest rate is not tolerable.”
Political uncertainty and foreign investment
Political stability has not yet been confirmed after August 7, 2021. In this regard, Chairman of Policy Exchange Bangladesh Masroor Riaz said, “Domestic and foreign investors are in a relatively inactive position as the democratic government is uncertain when it will come.”
Jabed Akhtar, president of the Foreign Investors Chamber, believes that if the customs and tax system is not reformed and the business management environment is not improved, foreign investment will not increase.
Negative trends in employment and GDP
According to the Bangladesh Bureau of Statistics, the number of unemployed in the third quarter of 2021 has risen to 2 lakh 5 thousand. In one year, it has increased to 1 lakh 3 thousand. At the same time, the number of people participating in the labor force has decreased by 1 lakh 3 thousand.
GDP growth is also seen in a negative genre. In the fiscal year 2021-27, the growth stands at only 8.22 percent, which is lower than the government's forecast. At the same time, the revenue deficit has increased. In the first six months of the current fiscal year, the revenue deficit stood at Tk.
The lowest export earnings in April in 6 months, the push of the garment sector
Meanwhile, in April there was a big push for export. In April, the export of overall clothing has slowed down as well as negative growth in the oven sector. According to the Export Development Bureau (EPB) data, the country's export earnings in April stand at $ 9.5 billion, which is the lowest in the current fiscal year. In April, exports fell by about $ 9.2 billion in April.
The total export earnings in the garment sector in 6 months are 12.7 billion dollars, the growth is 5 percent. However, in April alone, the revenue was $ 2.7 billion, which is only 5.7 percent higher than the same period of the previous year.
Oven clothing exports declined by 5.7 percent in April, though net clothing increased by 5.7 percent.
In this regard, Mohiuddin Rubel, a former director of the Bangladesh Garments Preparation and Exporters Association (BGMEA) and Managing Director of Bangladesh Apparel Exchange, said, “The performance of April warns us even though the speed of growth in the entire fiscal year is positive. In order to survive the competition in the export market, we need to ensure the continuity and production capacity of our supply system. '
The key to do at the moment
According to experts, the cases that have to be given priority in the multi -dimensional crisis are:
First, establish political stability and create an investment -friendly environment. Second, the bank sector reform and interest rates should be brought to a logical level. Third, the digitalization of the tax and the customs system needs to be made easy. Besides, steps such as ensuring energy security, incentive in incentives and easy loan facilities, the faster the industrial sector will turn around and the macroeconomics will return to the stable speed.
