By Commerce Reporter
LAHORE: The Lahore Chamber of Commerce & Industry (LCCI) has expressed serious concern over the federal government’s plan to borrow approximately Rs 5 trillion from the domestic banking sector during the third quarter (January–March 2026) to finance the fiscal deficit.
Senior Vice President LCCI Tanveer Ahmed Sheikh stated that continued heavy reliance on local banks for deficit financing would further tighten liquidity conditions for the private sector, adversely impacting industrial growth, business expansion, and job creation.
He said that commercial banks already allocate a major portion of their resources to risk-free government securities, leaving limited room for private sector lending. “This crowding-out effect raises the cost of borrowing for businesses, discourages investment, and undermines economic recovery,” he added.
The SVP LCCI noted that while fiscal challenges are real, excessive domestic borrowing is not a sustainable solution. He stressed the need for structural reforms, broadening of the tax base, reduction in non-development expenditures, and aggressive documentation of the economy to improve government revenues.
Tanveer Ahmed Sheikh further emphasized that the government should focus on securing long-term external financing on favorable terms, promoting exports, and encouraging foreign direct investment to ease pressure on the domestic banking system.
He urged policymakers to engage with the business community while framing fiscal and monetary strategies, ensuring that industrial activity, SMEs, and exporters are not deprived of essential credit.
“The business community stands ready to support national economic stabilization, but policies must strike a balance between fiscal management and economic growth,” he concluded.
