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Excessive govt borrowing from banks to affect private sector credit: FBCCI

Published : Sunday, 9 June, 2024 at 12:00 AM  Count : 123
The Federation of Bangladesh Chamber of Commerce and Industry (FBCCI) said private sector credit will be affected if the government takes the targeted loan in the proposed budget from the banking sector.

FBCCI President Mahbubul Alam said this while speaking at a post-budget press conference at the federation building in Motijheel on Saturday. The proposed budget has fixed the government bank borrowing target at Tk1.37 lakh crore.  

Excessive borrowing by the government from the banking system hinders the flow of credit to the private sector, with the governments needs crowding out, in economics language, the private sector players. When governments borrow, they compete with everybody else in the economy who wants to borrow the limited amount of savings available.

"As a result, we fear that there may be an adverse impact on investment and employment," Mahbubul said. The FBCCI president said, "The government has adopted a zero-tolerance policy against corruption. We welcome this initiative. It is very important to maintain the quality of the work undertaken under the annual development program and to complete the work efficiently and on time." Apart from this, efficiency should be taken into account in undertaking projects, so that the development becomes sustainable, he said.

Mahbubul said, "We have given several proposals related to revenue for the budget for the consideration of the government. Several cases were considered but in some cases the reflection of the proposal was not observed."

The FBCCI president said that the withholding tax on rice, wheat, potato, onion, garlic, beans, edible oil, sugar, and nuts has been reduced from 2 percent to 1 percent, which will help control inflation.

"IT sector tax exemption extended. This will increase the investment in this sector. Several positive steps have been taken to protect and promote local industries, which will encourage the sector concerned," he added.    —UNB



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