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The National Board of Revenue (NBR) witnessed a significant shortfall in revenue collection during the first five months of FY24, and it is now looking at a mountainous task of collecting Tk 2,97,666 crore within the remaining seven months to hit the fiscal year target.
Bangladesh had set Tk 4,30,000 crore for NBR as the overall revenue collection target in FY24.
During the five-month period, the NBR collected Tk 1,32,334 crore against a Tk 1,48,794 crore target, leaving around Tk 16,459 crore as shortfall in revenue collection, show latest statistics of the revenue board.
This slow pace of revenue collection during the July-November period could lead to a serious gap in the year-end target, triggering additional pressure on fiscal measures amidst the ongoing economic crisis.
NBR, despite concerted efforts, seems unable to attain its revenue collection target, and it is gradually falling behind, particularly in customs duties, starting from the beginning of this FY.
It should be noted that though Bangladesh had set Tk 4,30,000 crore revenue target, but IMF’s target is only Tk 4,00,500 crore.
So, concerns have escalated as the NBR struggles even to keep up with the International Monetary Fund's (IMF) reduced revenue collection target for FY24, imposed during the approval of its $4.7 billion loan to Bangladesh.
The revenue board's inability to meet the IMF target has raised doubts about its capacity to address the evolving economic landscape.
Commenting on the issue, former lead economist of World Bank Dhaka Office Zahid Hussain said, “If political unrest and instability continue, it is undoubtedly impossible for revenue mobilisation as much as expected, in a bid to reduce fiscal pressure.”
The NBR could not meet the revenue target for FY23 – set by the IMF at Tk 3,35,500 crore, which is Tk 35,000 crore less than the government-set target. The board collected Tk 3,25,272 crore, falling short of the government’s Tk 3,700,000 crore target.
At the end of this FY, the shortfall could go even higher than the figure recorded in the previous fiscal year. The NBR is supposed to raise the Tax-to-GDP ratio by an additional 0.5 percentage point in FY24 to secure more tranches of the $4.7 billion IMF loan.
NBR’s collection of Tk 4,00,500 crore is essential to attaining the IMF target, and the board will have to collect an additional Tk 2,68,166 crore during the December-June period of FY24 to secure this goal.
However, concerns have been raised by experts, such as Policy Research Institute (PRI) Executive Director Ahsan H Mansur, who emphasised the need for substantial reforms to avoid endangering the government's fiscal position.
“The NBR needs a heavy reform after the polls. No country across the globe can maintain macroeconomic stability at a 7.5 per cent to 8 per cent tax-to-GDP ratio. So, Bangladesh will be unable to do so as well,” he said.
According to NBR sources, the board has not been able to achieve the targets in any of the three sectors – imports, VAT, and income tax – in the first five months of the incumbent FY.
During this timeframe, the highest shortfall was in the income tax, with a deficit of Tk 6,111 crore. The income tax collection for July-November amounted to Tk 39,384 crore, while the target was Tk 45,496 crore.
On the other hand, during these five months, there was a revenue collection of Tk 51,510 crore through imports. Collection target from this segment was Tk 56,775 crore, denoting a shortfall of Tk 4,564 crore.
The value-added tax (VAT) category also saw a shortfall of Tk 5,782 crore in revenue collection over the five months. The target for this sector was Tk 47,222 crore, but only Tk 41,439 crore was collected during this period.
On the matter, NBR Chairman Abu Hena Md Rahmatul Muneem recently said at a press conference, “Attaining the revenue collection target is a big challenge in this election year, due to the ongoing forex crunch, declining imports, and a slowdown in businesses.”
He also expressed concerns that the upcoming political instability during the election year could adversely affect revenue targets.
