The Dhaka Chamber of Commerce and Industry (DCCI) said today that heavy government borrowing from the banking system tightens liquidity, making it more difficult and costly for businesses, particularly small and medium enterprises (SMEs).

The chamber urged the government to cut its high reliance on borrowing from banks, raising concerns that it would crowd out private sector credit.

Between July last year and April 1, the interim government and the new BNP-led government had together borrowed at least Tk 1.03 lakh crore, or 99.54 percent of the target for the current fiscal year 2025-26.

“To sustain private sector-led growth, it is critical to ease pressure on the banking system by limiting the government’s dependence on domestic sources,” the DCCI said in its proposals for the national budget for the fiscal year 2026–27 at a discussion at InterContinental Dhaka.

The chamber urged the government to raise the existing tax-free threshold for individuals to Tk 5 lakh and bring down the maximum rate of tax to 25 percent, down from the existing 30 percent.

DCCI called for rationalisation of the policy interest rate, arguing that a more balanced rate regime would help stimulate local investment without fuelling inflationary pressure.

DCCI highlighted inefficiencies in public spending and demanded improvements in expenditure management.

Enhancing spending efficiency could reduce the government’s borrowing requirements over time, it said.