Courswork for Econ-1212, Sessional on Introductory Macroeconomics. Submitted to- Fahmida Oni ma'am and MD Mehedi Hasan sir.

1. Submitted to
FAHMIDA AKTER ONI
Assistant Professor
MD MEHEDI HASAN
Lecturer
Economics Discipline
Assignment no. - 01
Summary of MPS H2FY2
Course Title: Sessional on
Introductory Macroeconomics
Course Code: 0311 15 Econ
1212
Submitted by
Group - C
Prosanto Majumdar
ID: 231502
Progga Haque
ID: 231503
Tasnuba Zarin Topa
ID: 231506
Chandra Kishor Roy
ID: 231514
MD Fahimur Rahman
ID: 231529

2. 1
MONETARY POLICY STATEMENT (MPS): H2FY24 (Summarized)
1. Delineation of MPS
With the macroeconomic objective of executing monetary policy in stabilizing a separate cluster
of diverse economic challenges, Bangladesh Bank (BB), the central bank of Bangladesh, has been
formulating and publishing Monetary Policy Statements since 2006. Monetary policy formation
and implication being the foremost mandate of our central bank, it aims to secure internal and
external value of Bangladeshi Taka (BDT) while maintaining decent economic growth.
1.1 Roles Involved
The contributing stakeholders in outlining this comprehensive strategy notably include, but not
limited to, former and present policy makers, think-tank economists, socioeconomic welfare
analysts, personnels from financial sectors, ensuring the prudent involvement of the Board of
Directs of BB. The inclusive deliberation, research, inter-consultations, and feedbacks made by
the stakeholders regarding prevailing macroeconomic factors- such as employment-
unemployment, inflation, investment trends, trade forecasts, sector-based performances in both
global and domestic backgrounds are scrupulously analyzed by the esteemed executives and the
Board of Directors of BB in crafting these strategic policies and credit projections. Furthermore,
approaches and actual outcomes from monetary policy implications from previous fiscal year
(H1FY24 in terms of H2FY24) are also deeply studied in processing the consequent MPS.
1.2 Implications of MPS in Concurrent Perspectives
The release of MPS – H1FY24 in June 2023 consists of efforts toward a contractionary monetary
policy implementing structural changes in monetary targeting framework focusing on reducing
high inflation and outline the levels within the FY24 budget; whereas, the second half of FY24,
released in January this year, has disregarded this policy and set an interest rate targeting
framework, focusing on real GDP growth of 6.5% and moderated inflation at 7.5% by June 2024
while applying a crawling peg system to set competitive economic boundaries of exchange rate.
Our economy has currently been evolving around two-fold complexities: i) Internal: instability of
exchange rate, depreciation with USD, inflationary pressures, high non-performing loans,

3. 2
increasing strain on foreign reserves; ii) Global (mostly results in disrupted supply chains): foreign
trade uncertainties, geopolitical tensions (e.g. Russia-Ukraine war), emerging rivalries, and
vulnerability against power-chairs. Anyways, the MPS H1FY24, taking these challenges into
account, took initiatives as following- i) setting cumulative basis point increase of 175 in policy
rates (e.g. spontaneously allowing depreciation of currency with market forces), ii) replacing
lending cap with SMART rate, iii) continued foreign currency sales as an automatic measure, iv)
credit flexibility support for CMSMEs, and v) balancing demand-supply factors- all these with an
emphasis on a qualitative tightening in the money market and the overall liquidity system.
2. Positive and Negative Outcomes of H1FY24 (June 2023 - December 2023)
Though less focused on fostering a more productive economic growth as H2FY24, the MPS for
H1FY24 also brought some noteworthy outcomes by December 2023 amidst the global economic
uncertainties. Those include:
➢ Inflation rate slightly eased up
to 9.41%
➢ Sales of foreign currencies of
US 6.74 billion
➢ Increased interest rates from
the EDF (Export
Development Fund)
➢ NRB investment is being liberalized and FC accounts are opened (180 days limit of export
proceeds)
➢ Weighted average call money rate surged to 8.84% and repo rate to 8.06%
➢ Stabilized interbank call money rate came within the IRC
➢ Export earnings (external demand) had a marginal increase of 0.84% (PoP)
➢ Core inflation (excluding food and fuel) averaged to 7.72%
➢ CPI (Consumer Price Index) based inflation reached to 9.41% from 9.74% in June
➢ Increased investments in T-bills and T-bonds
However, there were some unhealthy outcomes too that the monetary and fiscal authorities failed
to bring positive. Some of those include:

4. 3
➢ Food inflation outweighed non-food inflation
➢ Custom-based import (internal demand) declined to 21.02% (PoP – Period Over Period)
➢ Consumer credit (internal demand) slowed down to almost 16% (YoY – Year Over Year)
➢ CPI-based average headline inflation rose to 9.48% from 9.02%
➢ The broad money, M2, grew by 8.8%
➢ Net Foreign Assets (NFA) declined to 21.8%
➢ BB’s NFA experienced a substantially negative growth (economically crucial outcome)
➢ Tightened cash reserves in banks.
2.1. Private and Public Sector Performances:
Public sector experienced a moderation, might not
reaching the projection levels, due to the
contractionary monetary policy. But private sectors,
an indicator of private investment, performed
significantly well-off.
➢ Credit rating expanded by 10.2% (projection
was 10.09%)
➢ Public sector credit grew 18% (projection was 37.9%)
➢ Large-scale manufacturing, component of GDP, surged to 15.29% from 6.24% in previous
fiscal year (economically crucial outcome)
➢ Values of NSCs saw a decline by 3859 crores (1616 crore it was in same period previous
FY)
➢ Net foreign financial decreased to Tk 12,218 crore (17, 578 crore it was in same FY period).
Thus, it is to conclude that private sectors showed better metrics than all other South-Asian
countries except India, manifesting our economy’s resilience in broader Asian economic
landscape.
3. Prominence of H2FY24 in National and Global Heights
The IMF’s recently released World Economic Outlook has estimated the global GDP to dropped
down to 3.0% in 2023, and stand as 2.9% by 2024, falling below the historical average of past two
decades. GDPs of advanced economies are to decelerate to 2.4% by 2024 from 2.6% in post-

5. 4
COVID 19 times. However, despite a marginal decline of 4.0, Bangladesh prevails its GDP growth
rate surpassing 6% in 2024.
The economy of South-Asia
contributes approx. 2/3 to the
global economic growth, now
going to reach 4.2% by 2024 after
a fluctuation – WEO, October,
2023. The tightening of monetary
policy, in first half of 2023,
showed an upward trend in
economies of South-Asia and Pacific regions, but afterwards, why it tends to fall down is because
of China’s property sector crises and the post-pandemic losses and the resulting weaker external
demand.
3.1. The Inflationary Conditions
Since mid-2022, global headline inflation has been stably decreasing dropping down to 5.8% in
2024 from 8.7% in 2022, and with that International Monetary Fund (IMF) forecasts the rate to
surpass the projections by 2025. Advanced economies saw a decreased rate of 4.6% by the end of
2023 from 7.3% in 2022, manifesting disinflation; and developing economies prevailed a rate of
8.5% in 2023, projecting 7.8% by 2024, showing a slower pace than its advanced counterparts.
Nevertheless, some of the drivers behind the anticipating lessened-inflationary pressures are
following:
➢ Consistently declining fuel and energy pricings;
➢ Implementation of robust monetary policy frameworks;
➢ Decreased commodity prices driven by policy tightening;
➢ Effective communication;
➢ Lower susceptibility shocks in exchange rates;
➢ Consistent decline of global food pricing;
➢ Stable trend of non-energy commodities.

6. 5
3.2. The Interest Rate Conditions
The post-COVID 19 afterwards, the central banks of several countries have been coping with the
inflationary disruptions in tightening their policy measures in two ways: i) increasing interest rates
(e.g., Central Bank of Japan) and ii) decreasing interest rates (The Federal Reserve System, The
Bank of England, The Reserve Bank of India). Bringing sustaining inflationary ease in the
respective countries, however, our peer countries of the South-Asia took both the measures; India,
Pakistan, and Indonesia increased the rate and
Vietnam and China did a slight decrease. However,
noticeably, in the second half of FY 2020-21, these
countries showed a stable rate.
The graph demonstrates that by the end of December
2023, while Pakistan had the highest policy rate of
around 23%+ and Sri Lanka showed a fluctuating
trend within the two revolving fiscal year, rest of the
other countries initiated a stable policy rate ranging 3.5%+ to 8.5% throughout the manifested
period.
3.3. National/Local Contexts
Increased external and internal demands and stably recovering trade conditions, backed by strong
monetary policies has brought the real GDP growth rate to 7.10% in FY22, but it curtailed down
to 6.11% in FY23. Unfavorable macroeconomic conditions such as domestic price level raising,
currency depreciation and pricing rigidity, oligopolistic
markets are the key reasons of the reduced pricing of
our products and services pacing behind from the
current global pricing stabilization. Moreover, our CPI-
based consumer price index (commodities including
food, non-food, general, and core) has been surging
drastically within the end of the H2FY 2020-21; starting
from Oct-21, it now has stood at 9.48% from a 6.15%
in FY22.

7. 6
Amidst these slower growth prospects, for the remaining 6-months of FY24, fields such as resilient
domestic demand, RMG demand, inflow of remittances, agricultural sectors, impacts of major
religious festivals are still prevailing the lights of hope for the projected growth rate target of 6.5%.
In terms of mitigating inflation, BB’s stringent policy measures for national budget FY24 and
easing external pressures are to pivotally curb the inflationary pressures, making the revised target
of 7.50% inflation feasible to achieve.
3.4. Liquidity Conditions
The effect of constant contractionary stances and consistent intervention in the foreign exchange
market by BB has been diminishing the excess cash reserves and liquid assets. Besides, substantial
USD sales and high currency-deposit ratio absorbed a massive local currency liquidity. The
resulting dried liquidity situation influenced the banks to surge the interest rates. Now, the avg.
call money rate climbed to 8.84% in Dec-2023 from 6.06% in the initial stage of H1FY24. This
upward tendency worked as an implementing activity of monetary policy statement, which aims
to shape the mechanisms of lending and borrowing. Furthermore, retaining BB’s commitment to
commercial banks’ and other financial institutions’ prosperity, it has been extending diversified
amenities including new financial instruments, repo facilities, assured liquidity support (ALS), and
other comprehensively specialized supports for respective specialized banks. The implementation
of SMART has surged the yield rate from 7.10% to 8.14% by the end of H1FY24.
BB’s existing efforts towards pivotally-
potential sectors like agriculture and
CMSMEs play a big role in bringing the
monetary prosperity of Bangladesh,
focusing on 1) fostering sufficient
liquidity and nurturing employability, and
2) stimulating output generating activities. An example of these initiatives may be the interest rate
of SME sectors in FY24 amidst these teeming uncertainties; lowest is 3.41 and highest is 10.93,
both in %- having a slight difference from FY22 and FY23 in lowest one and around 2% difference
in the highest one. Altogether, these attempts to mitigate inflationary pressures and elevate nominal
interest rates by the end of the FY24.

8. 7
3.5. External Sectors and The Outlook
The external sector of Bangladesh is teemed with diverse range of challenges, affected by factors
like Balance of Payments (BoP), geopolitical complexities, geoeconomic tensions, and global
monetary tightening. However, our depreciated currency and dedicated export brought a positive
shift in Current Account Balance (CAB) in July to October
2023; though, the overall BoP still ended up with a deficit
during H1FY24 for some obvious decreasing trends. Our RMG
(ready made garments) sector, accounting for 85% of total
exports, experienced an increase of 2.75% in H1FY23,
resulting at USD 22.23 billion. But it showed a massive
10.58% growth in the previous fiscal year, yet it still shows the resilience to remain consistent in
H2FY24, considering the further elevated challenging global conditions.
In H1FY24, our economy experienced a lessened growth in export sector comparing to FY23, the
import sector showed a substantially decreased rate of 21.02%, standing at USD 27.76 billion,
which showed an increase of 4.35% in FY23 The determinants
of this scenario include domestic rate hikes, falling commodity
pricings, discouraged import of luxurious goods. Such
decreased import rate lessened our trade deficit to USD 4.76
billions by December 2023 from USD 11.82 billion.
Moreover, by December 2023, hinting at a promising trajectory in these respective sectors for
future fiscal years,
➢ Remittance inflows experienced a surplus of $579 million, even after compensating the
$4.49 billion deficit in FY23
➢ Wage earner remittances showed a growth of 2.91%, aided by currency depreciation
➢ Overseas employment prevailed a growth of 40.46%
Coming back to Balance of Payments, it demonstrated a deficit of $4.90 billion during July-
December 2023, less from the 6.00 billion of deficit in FY23. However, anticipated manageable
CAB and decreased LC openings, backed by pivotal roles of several financial management tools,
can prevail positive results with an expected increase in FDI inflows, slowed down external

9. 8
borrows, reduction in trade credit deficits- resulting an overall balanced scenario of BoP by the
end of FY24.
4. Movements of Exchange Rate and Foreign Exchange Reserves
Currency Depreciation and Exchange Rate: Within making notable adjustments in BoP, the rate
of BDT against USD reflected a depreciation of 13.8% in July 2023 and another increased
depreciation of 1.49% by the end of H1FY24. This resulted decreased rate of Tk. 110.00/USD,
however, indicated an appreciation of 3.71% in Real Effective Exchange Rate (REER), reaching
104. Nevertheless, this overvalue of our currency will better if relative price indices could be
curtailed down.
Major Potential Strategies: 1) Unification of exchange rates and 2) Adopting interbank exchange
rate of Bangladesh Foreign Exchange Dealers Association (BAFEDA) in foreign transactions.
Foreign Exchange Reserve Complexities: During H1FY23, BB’s net sale of foreign reserve of
USD 5.69 billion contributed to the resulted decrease to USD 21.87 billion of foreign exchange
reserves by the end December 2023, from USD 24.75 billion in beginning of June 2023.
Notable Potential Measures: 1) Implementing a crawling peg system and 2) Transitioning to a free-
floating exchange rate regime.
5. Capital Market of Bangladesh
Undergoing several economic challenges both locally and globally, the capital market of
Bangladesh prevailed many varying fluctuating trends throughout H1FY24. For instance,
➢ The DSEX prevailed a decline of 1.5%
➢ The indicator of market liquidity, the daily average turnover, dropped by 44.80% (BDT
983 crore in Dec-22 to BDT 543 crore in Dec-23)
➢ Insurance sector had the highest turnover share of 25.4%
In a nutshell, the 0.64 percent increase, settling at 6,246.50 points from 6,206.81 points, in
DSEX index increased the marginal capitalization reaching BDT 780849 crore from BDT
772078 crore in June 2023.

10. 9
6. Recent Policy Review
6.1. Exchange Rate Stabilization
Bangladesh Bank has been implementing several measures since mid-2022 to stabilize the
exchange rate within the rising inflationary pressures, with initiatives like allowing currency
depreciation and still encouraging the investors to utilize the formal channels and stick to the
inflow of their foreign exchange earnings, making so many provisionary and profitable
opportunities. Some of these policy measures are as following:
➢ Permitting domestic commercial banks Offshore Banking Operations (OBOs)
➢ Authorizing approved foreign exchange dealers to open and maintain Resident
Foreign Currency Deposit (RFCD); this accepts any foreign currency
➢ Allowing AD banks to open temporary foreign currency accounts to boost FDI
(Foreign Direct Investments) and manage capital flexibly
➢ Setting new retention limits on exports with Export Retention Quota (ERQ) to
boost foreign currency liquidity
➢ Extending the facility of Offshore Banking Operations (OBO) by Domestic
Banking Units (DBUs) till the end of FY24
➢ Extending the retention facility for LC payments, which also favors local
suppliers producing goods through Back-to-Back Letter of Credit (BBLC)
➢ Imposing Ad limits and capping SMART plus 5 percent annum
➢ Revising the price of USD and EURO under the Green Transformation Fund
(GTF) on the discontinuation of labor
These initiatives have the opportunity of availing favorable interest rates and time duration for
the dealers, importers, and exporters even amidst these teeming complexities. Also, additional
measures have been implementing to cope with illegal money changers and Mobile Financial
Services (MFS) providers and mitigate unauthorized transactions associated with hundi.
6.2. Foreign Exchange Reserve
Our foreign exchange reserve assists in fight against external shocks and playing a pivotal role
in ensuring stability of exchange rates, supporting international rate, and so on. Due to the
existing financial deficits, geopolitical conflicts, and other economic fluctuations, imports of
commodities, materials of industry goods, remittance inflows, maintenance of trade balance,

11. 10
and foreign investment are also being hampered. Therefore, BB has been executing strategic
foresights to safeguard our foreign exchange reserve and elevating export competitiveness.
The recent intervention of BB in supply-side sectors with managerial strategies and
disbursement of loans have shown significant improvement in current account deficit and
reserve management. The reserve of USD 27,13 billion, by December 2023, is equivalent to 4
months of import, exceeds the international benchmark level by 1 month. This shows a rise
from USD 24753 billion from June 2023 (as per BPM6).
6.3. Escalating Remittance Inflows
Maintaining a quality remittance inflow plays a pivotal role in both strengthening international
reserve and rural economy of Bangladesh. BB, along with the Govt., has been taking
comprehensive policy measures in augmenting the influx of remittances. These include:
➢ Dual Incentive Scheme – offers an additional incentive of 2.5%
➢ Increased Remittance Limits – The new doubled MFS limit is Taka 125000; this is
to liberalize the remittance transfer
➢ Expanded Remittance Channels – Crediting the wage earners with equivalent tk
value through Payment Service Providers (PSP)
➢ Streamlined Banking Regulations – Saves time and improves the efficiency of
remittance services
➢ Efficient Remittance Disbursement – Streamlining the process, making it easy,
hassle free, and cost effective
➢ Fair Pricing Remittances – Safeguarding the interests of remitters
➢ Promotion of Official Channels – Foreign embassies celebrating International Day of
Family Remittances (IDFR) to promote advantages of official channels
➢ Combating Unofficial Channels – Collaborating with Bangladesh Financial
Intelligence Unit (BFIU) to curb Hundi activities
➢ ‘Probash’ Pension Scheme – Providing incentives for expatriate Bangladeshis and
securing long-term financial security
➢ Tax Remission on IT Freelancers – Cutting tax payables from IT freelancers
Overall, BB always is committed to creating an amenable condition to enhance remittance
inflows and benefit the nation, and especially, the hardworking expatriate communities.

12. 11
6.4. Anchoring Inflation
In declining inflation and its pressures, BB has taken measures in both demand-side and supply
side; from increasing policy rate to 7.75% overnight and ceasing govt. lending to create
funding schemes for pivotal sectors like agriculture and CSMEs and agriculture, many
remarkable policy measures are enacted to control inflation. Some of the major policy
measures are:
1. Increasing Policy Rate: BB increased the policy rate to 175 basis points from 6.00% to 7.75%,
with a standing lending facility of 9.75% in H1FY24
2. Removing Remaining Lending Restrictions: With an added margin of 300 points, BB
introduced the Six Months Moving Average Rate of Treasury Bill (SMART)
3. Removing Deposit Rate Floor: BB eliminated the interest rate floor on deposits to encourage
higher real interest rate for the public and aiding demand management.
4. Quantitative Tightening: For the current fiscal year, BB infused a net $5 billion to mitigate
demand side inflationary pressures
5. Exchange Rate Unification: BB introduced a market driven exchange rate regime to tackle
challenges from externalities
6. Sector Focused Funding Initiatives: Focusing on import substitution, BB alleviated supply-
side conflicts by funding the agriculture and CMSME sectors.
These steps- encompassing interest rate modification, regulatory changes, restrictions in
lending, monetary tightening, and unified exchange rate policies are expected to steer a
new era of economic stability, with effectively anchoring inflation.
6.5. Financial Sector Stabilization
In recent years, several approaches by BB have been encapsulated in strengthening the banking
sectors and regulating an inclusive financial landscape overall. Through these measures, we
are being transformed into a digital era of banking and stabilized dynamically evolving
financial system. Some of these are, but not limited to:
➢ The Bank Company (Amended) Act of 2023 and the introduction of The Financial
Company Act of 2023
➢ Enhancing legal compliance in loan recovery and streamlined supervising in financial
sectors

13. 12
➢ Roadmap for the banking sectors’ adoption of IFRS9
➢ Advancing sustainable financial policy of greenbanking and climate-conscious
financing; enabling a stable eco-friendly financial system
➢ Pursuing a higher M2/GDP ratio, akin to peer nations
➢ Diversification of long-term financial instruments
➢ Authorization of bancassurance, allowing banks act as corporate agents for insurance
companies
These altogether can be called as a series of holistic processes in pivotally pave the way to a robust
economy, and bringing feasibility, sustainability, and accessibility for all stakeholders involved in
H2FY24 and the years ahead as well.
7. Enhancing Financial Inclusion and Establishment of ‘Cashless Society’
The transaction system of Bangladesh has been fostering financial inclusivity through the cashless,
unbanked, branchless, and digitalized evolution of MFS (Mobile Financial Services), backed by a
knit interoperability among MFS providers. Such an economic empowerment manifests a greater
step ahead to the ‘Cashless Bangladesh’ program (targeting 75% cashless transactions by 2027) of
government’s ‘Smart Bangladesh Vision’. A lot initiatives have been introduced to merge the city
and marginalized population into the formal banking system as the following ones:
➢ Emergence of digitalized apps and systems like Bangla QR Code, Bkash, Nagad, and
Takapay and their integration with most of the commercial banks, allowing an interest rate
of 1% for enabling these digitalized modes
➢ Comprehensive digitalized services of savings, loans, insurance, e-wallets, and remittance
sending
➢ Allowing 14-18 yo to use these digitalized transaction services
➢ Collaboration of MFS providers and Universal Pension Scheme (UPS) and charging a
unified fee of BDT 0.7/100 tk of deposit
➢ Augmented the revolving finance fund for ‘digital microcredit’ from BDT 100 crores to
500 crores
➢ Opening of ‘Individual Retail Account’ with minimal documentation to benefit micro-
entrepreneurs, traders, and service-providers

14. 13
➢ Launch of Binimoy, an Interoperable Digital Transactions Platform (IDTP), providing
unified access to multiple digital payment services
➢ Guidelines for Merchant Acquiring and Escrow Services to enhance consumer protections
in e-commerce sectors
These initiatives signify our firm steps towards embracing the ultimate financial inclusion and
step into the era of digitalization.
8. Strengthening Capital Market
On our way to becoming a developing nation, a well-developed capital market is an essentiality to
properly manage the financing and private investments in the field of infrastructural mega projects.
Bangladesh Bank (BB), along with Bangladesh Securities Exchange Commission (BSEC), and
other such government entities have been consistently taking robust measures in enabling a less-
complex capital market. Some significant ones from recent times include:
➢ BB, BSEC, and the Central Depository Bangladesh Limited (CDBL) have jointly
introduced secondary trading of government treasury bonds
➢ BB released guidelines for the market-to-market-based revaluation of treasury bills and
bonds
➢ Allowed NBFIs to calculate their capital market exposure based on the investment cost
➢ Islamic Shariah-compliant securities are exempted from bank’s market exposure limits in
line with the Bank Company Act
➢ Extended the duration for securities market intermediaries in listed debt and treasury bond
➢ Allowed intermediaries to invest a minimum 3.0% in listed debt securities and maximum
of 1.0% in treasury bonds
➢ Exempted independent directors from providing guarantees for company loan
9. Forward-looking Policy Initiatives
9.1. Regulation of Good Governance
The recent regulatory initiatives by BB caters scrupulous scrutiny and supervision in credit and
financial institutes, fostering financial stability and strong governance of Bank Company Act.
BB’s vigilant and prudent measures addressing the issues signifies lessened potential crises within
the economy, as there will be honesty and efficiency. Such major initiatives encompass around:

15. 14
➢ Limiting the maximum number of directors from the same family to three from four
➢ Enabling BB to authorize a written order if any executives of a bank company occur
miscreants
➢ Any individuals or family members cannot own more than 15% of NBFI’s share
➢ Introducing Prompt Corrective Action (PCA) framework to enable timely regulatory and
supervisory intervention
➢ Integrating Risk Based Supervision (RBS) into a FYP, enacting from 2025.
9.2. Management of Non-performing Loans (NPLs)
The recent amendments of The Bank Company Act, 1991 have addressed the high incidence
of non-performing loans in our financial sectors. These acts target the willful loan defaulters
to escape repaying the loans with falsified information, fund misusage, illegal monetary
transfer, and so on to implement transparency and reduce the default falsified culture. Once
identified, BB can now propose strict restrictions and upto five-year post-clearance. Some of
these measures taken in recent times include:
➢ Requiring commercial banks to use third-party evaluation firms from BB-approved list
➢ Including detailed data on banks’ rescheduled loans alongside NPLs, reducing the NPL
ratio below 10% for SOCBs and 5% for PCBs by 2026
➢ Grossing overall NPL limit of 8%
➢ Introducing rescheduling and writing off loans classified as Bad and Loss (BL)
➢ Initiating MoU with several domestic private commercial banks
➢ Forming Financial Institutions Department (FID) and establishing Asset Management
Company (AMC)
To conclude, all these measures mark a notable step to an effective management of distressed
assets and save them from our willful default advantage-taking culture of power-chairs.
9.3. Streamlining Open Market Operations
From targeting an interest rate targeting system in July 2023, i) the repo rate is the policy rate and
call money rate is the policy rate; ii) SLF is the upper limit in IRC and SDF the lower. BB is now
targeting to maintain the proximity of call money rate in the challenging economic conditions.
Moreover, further open market implementation is foreseeable with necessity if the optimization of

16. 15
policy transmission, boosting liquidity management, reserve maintenance cycle, and etc. are
needed.
10. Monetary and Credit Projections for H2FY24
Due to BB’s newly occupied system of an Interest Rate Targeting Framework, monetary and credit
projections no longer serve as the primary focus. Currently, the focus encompasses broader
economic goals such as maintaining price stability and promoting desired economic growth and
treats broad money and reserve money as indicative targets.
Some of the instruments that are used in managing liquidity are Cash Reserve Ratio (CRR),
Statutory Liquidity Ratio (SLR); open market operations such as Standing Lending Facility (SLF),
Standing Depository Facility (SDF), and BB bills. Also, specialized instruments such as
Mudarabah Liquidity Support (MLS) and Islamic Bank Liquidity Facility (IBLF) are also
employed to manage the liquidity.
Precise, for projection of FY24, the forecasts by the end of June this year are-
1. The broad money growth is 9.7%
2. GDP growth rate is 6.5%
3. Average CPI is 7.5%
4. Public sector growth is 27.8%, reflecting government’s focus on priority expenditures
5. Private sector growth is 10.0%
6. Domestic Credit Growth is to be 13.9%
7. Net Foreign Assets (NFA) is to decrease by 2.4%, based of BoP deficit