The central bank's move to squeeze credit flow to the private sector will adversely impact production and job creation in the country in the coming months as the demand for working capital is already rising amid the heavy devaluation of the local currency against the US dollar, said a chamber leader yesterday.

Bangladesh Bank cut the private sector credit growth target to 10 percent from 11 percent last month as it unveiled its monetary policy for the second half of the fiscal year, aiming to reduce money supply in a bid to curb inflationary pressure.

The current year would be challenging for the private sector as they will face problems availing loans despite the fact that their demand for working capital has risen by 30 to 40 percent, owing solely to the recent devaluation of the taka, according to Ashraf Ahmed, president of the Dhaka Chamber of Commerce and Industry (DCCI).

The taka devalued by around 28 percent against the US dollar over the past two years, central bank data showed.

Ahmed said that if they could not secure adequate funding for the increasing demand of working capital, they would have to reduce production.

"Ultimately, it will impact the job creation," he added.

From this perspective, the DCCI is working to increase the flow of credit to the private sector so that the vibrancy of the economy can continue, he said at an event organised by the Capital Market Journalists' Forum (CMJF) at its office in the capital, titled "CMJF Talk".

"There is a US dollar shortage in the banking sector, so problems regarding import may remain for months. That will also impact the economy," the DCCI president added.

Corporations can issue shares or bonds to raise funds in order to meet finance demands, but that is a long process. The government should work on it so that the fund-raising process in the stock market becomes easier and less time consuming, he opined.

Another problem is the traffic jam in Old Dhaka, which has been a major concern for wholesalers of goods. It has been prevalent for many years but has now become even more congested.

He also highlighted that the country needs a huge amount of investment to develop the economy, but to get investment, a conducive environment is necessary.

"Still, people have to go to four or five officials to get a trade license. However, a one-stop service should be arranged so that businessmen do not face any hassle," he added.

Golam Samdani, president of the CMJF, and Abu Ali, secretary general of the forum, were among those present at the event.