ISLAMABAD - The government should refrain from its current approach of rampant banks borrowing as it was seriously damaging the economy and thwarting the efforts of private sector to expand business activities.

ICCI Senior Vice President Mehmood Ahmed Warraich stated this in a meeting with businessmen on Wednesday.

He said that due to heavy bank borrowing by the government, industrialists were unable to avail easy credit from the banking sector and this was crippling industrial growth in the country. As per latest report of the State Bank, the government has borrowed Rs.324 billion from scheduled banks during July 30 to Sept 7 of this year, which was 123 per cent higher than the same period of last year. It shows the reckless approach of the government to cope with fiscal deficit problems.

Mehmood Warraich said the government’s accumulated borrowing of Rs.2.360 trillion till June 2012 from the scheduled banks has already crossed the SBP limit of Rs.1.704 trillion. Therefore, it is high time that SBP should intervene and stop the govt from this practice to save the economy from further damage. He was also critical of banks for changing their focus from private sector to government papers as it was against the economic interests of the country in multiple ways. ICCI SVP said that economy of Pakistan was facing multiple challenges including acute energy crisis, hefty decline in investment, deindustrialization, low tax revenue, law & order problems and outflow of capital from the country.

The businessmen stressed that in these challenging times, government should support the private sector with easy credit facility to accelerate the pace of industrialization. They said that the growth of private enterprises would increase productivity, trade, exports and revenue generation for the country while the current approach was decreasing productivity creating more problems for the economy and causing unemployment.

They were of the view that instead of resorting to heavy borrowing from banking sector; government should try to expand tax net by bringing all untaxed sectors into the taxation system and take policy measures for encouraging entrepreneurship culture. These measures would help the economy come out of current challenges and generate more revenue for the national exchequer, he said.