The Federation of Bangladesh Chambers of Commerce and Industry on Saturday said that the government鈥檚 excessive borrowing from the banking sector might hamper the private sector credit flow, eventually affecting investment and employment in the country.
FBCCI president Mahbubul Alam made the statement at a press conference on the proposed budget for the 2024-25 financial year held at the FBCCI office in the capital Dhaka on the day.
The proposed budget deficit is Tk 2.56 lakh crore, which is 4.6 per cent of GDP. The government plans to borrow Tk 1.6 lakh crore from domestic sources, with Tk 1.37 lakh crore coming from the banking sector, incurring a high-interest burden, he said.
The FBCCI president suggested that the government should focus more on borrowing from foreign sources at low-interest rates to avoid adverse impacts of domestic borrowing.
Alam emphasised that the government must rein in rising inflation, as otherwise, misery and suffering of the people would increase.
The proposed budget targeted an inflation rate of 6.5 per cent, while the current rate is 9.89 per cent, making it very challenging for the government to achieve its inflation goal, he said.
He stressed that governance and proper monitoring were crucial for addressing budget implementation challenges. Clear guidance and plans are necessary for enhancing efficiency, transparency and accountability, he added.
The government has proposed a 1 per cent import duty on capital machinery for all industries in economic zones and high-tech parks for FY 2024-25, which may discourage foreign investment in these special regions and send wrong message to foreign investors, Alam said.
He proposed extending previous facilities for economic zones for five more years.
Alam also called for the government to strengthen its spending containment policy further. He highlighted the importance of maintaining quality of works undertaken under annual development programme and ensuring they were finished on time with efficiency. Additionally, he urged the government to increase individual tax-free income limit to Tk 4.5 lakh from Tk 3.5 lakh, considering high living costs and current macroeconomic perspective.
He also requested minimising source tax on all import products to 0.5 per cent from 1 per cent. Tax officers are currently rewarded for identifying tax evasion, which often leads to abuse of the law.
He requested that the government abolish this reward system to reduce discretionary power of the officials and instead provide them with alternative incentives.