Govt plan to borrow Tk1.12 lakh crore from banks may hamper private investment: ICAB
Achieving the revenue target of Tk6,95,000 crore requires comprehensive reforms
The Institute of Chartered Accountants of Bangladesh (ICAB) has warned that the government's plan to borrow Tk1,12,000 crore from the banking system to finance the budget deficit in FY2026-27 could reduce credit availability for the private sector and negatively impact investment.
Briefing reporters on chartered accountants' views on the proposed budget at the CA Bhaban in the capital today (13 June), ICAB President NKA Mobin said the budget reflects the government's commitment to economic stability, revenue generation, employment creation, investment expansion, and private sector development.
However, achieving the revenue target of Tk6,95,000 crore requires comprehensive reforms and efficiency enhancements in the tax administration, he added.
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Mobin noted that the proposed budget deficit is Tk2,43,000 crore, with Tk1,12,000 crore expected to come from bank borrowing.
He warned that such heavy borrowing could limit credit availability for the private sector and hinder investment.
The ICAB welcomed the government's focus on tax system modernisation, digital transformation, improving the business environment and investment-friendly policies.
It said raising the tax-to-GDP ratio and ensuring transparency and accountability in tax administration are essential for long-term economic growth.
The organisation also said several of its pre-budget recommendations were included in the Finance Bill, such as abolishing the minimum tax provision, setting tax rates for the next five years, offering tax incentives for registered start-ups, strengthening tax refund administration, and reducing mandatory deposits for tax appeals.
The ICAB said these measures will improve the ease of doing business and create a more favourable investment climate.
It also welcomed VAT exemptions for content creators and freelancers, changes to VAT rules for locally manufactured products, and provisions related to free trade zones in customs laws.
However, the ICAB urged the government to reconsider some measures, warning that the proposed 0.2% advance tax on direct sales to retailers by manufacturers, importers and suppliers could increase inflationary pressure.
The ICAB also raised concerns that making BIN mandatory for trade licence renewal and MFS merchant accounts could create difficulties for small and emerging businesses.
It further recommended online tax hearings, full digitisation of tax administration, and stronger oversight and auditing of public expenditure.
ICAB chief Mobin said the Document Verification System (DVS), jointly launched by the NBR and ICAB, has helped improve transparency in tax administration, prevent tax evasion and boost revenue collection.
