Investment climate after polls

DESPITE banks having no liquidity crisis, credit to the private sector has all but stagnated. Indeed, going by central bank data, loans taken by the private sector is nearly six per cent lower than Bangladesh Bank's target of 16.5 per cent for the current fiscal. Reasons for such a gloomy picture are multifaceted. With foreign bank borrowings hitting the US$1.5billion mark, most Bangladeshi banks have ended up with excess monies on their books. The fact that most banks have tightened their oversight in the face of numerous banking scams last year has had a debilitating effect on loan sanctioning. Then again, it is not surprising to find less enthusiasm to take loans at high interest rates hovering between 14 and 15 per cent.
Despite the calm in the political scene since the last general elections, the private sector has been hesitant in taking loans. Because it is not only political stability that dictates growth, rather, the poor state of infrastructure and the non-availability of industrial gas connections have effectively put industrial expansion on hold. Turning the economy around is going to be a difficult task given the context. Restoring investor confidence depends on a continuation of the relative calm that has existed in the post-election period. Making available sufficient primary energy resources, in our case, gas for industrial production remains a major headache for policymakers. Unless fuel for industry can be ensured, it can safely be assumed that new projects or expansion of existing production base will remain on the backburner for the foreseeable future.