Former President of Islamabad Chamber of Commerce and Industry (ICCI) Dr. Shahid Rasheed Butt on Thursday said the agricultural economy has been destroyed by the floods therefore banks should help revive this sector which is a source of income for the majority of the population.
Banks continue to prioritize lending to the government and big businesses but it should also give loans to the agricultural sector and SMEs to revive the economy, he said.
Shahid Rasheed Butt said that there is a huge gap between government revenue and expenditure which is being met by borrowing from commercial banks at very high rates.
Banks are also happy because these loans carry zero risk which suits their businesses but these institutions should also consider their responsibility, he added.
The business leader said that from July 1 to November 18, the government has taken a loan of 1.238 trillion rupees, while the private sector got loans of only 42.6 billion.
The government is taking a huge amount of loans surpassing the agreed target therefore resources have to be allocated to pay the interest on them leaving little funds to cater to the social sector and development works.
He noted that ignoring the agriculture and private sector slows down the pace of economic growth which affects GDP while increasing unemployment.
During 2021, the federal government borrowed 2.959 trillion from banks while the private sector could secure loans of 766 billion rupees.
The federal government took loans of 3.44 trillion rupees in 2022, while loans of 1.61 trillion were given to the private sector, which was disappointing.
According to the World Bank, fewer loans are being given to the private sector for the past several years, which is affecting the economy.
To remedy this situation, the government will have to increase its revenue, give priority to direct taxation, reduce its expenditure and ensure better utilization of resources.
