Govt borrowing may hinder private sector credit flows: FBCCI

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has said the government's excessive borrowing from banks may hinder the credit flows to the private sector and negatively affect investment and employment.

FBCCI President Mahbubul Alam said this in a press conference organized on the proposed national budget for the 2024-25 fiscal year (FY) in Dhaka on Saturday.

Metropolitan Chamber of Commerce & Industry (MCCI) President Kamran T Rahman, Dhaka Chamber of Commerce & Industry (DCCI) President Ashraf Ahmed, and FBCCI board of governors members and businesses attended the press conference.

He said the government will have to take Tk 1,60,900 crore in loans from internal sources, of which Tk 1,37,500 crore from the bank system, and alongside, it has to bear the burden of interest.

"The government's excessive borrowing from the bank system creates obstacles to the credit flows to the private sector. As a result, it may negatively affect investment and employment," he added.

Mentioning that the scope of social safety net programs has been increased to meet the budget deficit, Mahbubul Alam said these initiatives will play positive roles in consolidating social security and the social economy.

However, reaching the benefit to the actual beneficiaries properly must be ensured, he added.

The FBCCI chief said it is essential to ensure commerce-friendly revenue management and reform the National Board of Revenue (NBR). Alongside this, it is also necessary to raise the area of taxes to increase the tax-GDP ratio and expand the tax office to upazila levels.

EAR/MSU