Private sector credit flow at risk if bank borrowing rises in budget: CPD

The proposed budget's increased reliance on bank borrowing may create pressure on private sector credit flow, the Centre for Policy Dialogue (CPD) has warned. If government borrowing from the banking sector rises, the availability of funds for the private sector could shrink, potentially disrupting investment flows.

CPD Research Director Khondaker Golam Moazzem expressed the concern while speaking to journalists after the budget announcement outside the National Parliament on Thursday afternoon, June 11.

To address the situation, the government should explore both domestic and international financing opportunities for the private sector, he said. The think tank also noted that while efforts to expand the tax net are welcome, the revenue collection target of Tk 6.95 lakh crore may be challenging to achieve.

He further said if foreign loans do not materialise at expected levels, the government may ultimately have to rely more on domestic bank borrowing, which could further constrict private sector credit.

Earlier, presenting the Tk 9.38 lakh crore national budget for 2026-27, Finance Minister Amir Khasru Mahmud Chowdhury projected a deficit of Tk 2.43 lakh crore, which is 3.6 per cent of GDP.