Home ›› 22 Nov 2022 ›› Front
The revenue collection by the National Board of Revenue (NBR) is growing slowly against the actual target for July-October period of FY23, prompting the government to borrow from banks to meet the budget deficit.
Usually, the government borrows from the scheduled banks, and sells national saving certificates to collect money directly from the people; but this year, it borrowed heavily from the Bangladesh Bank due to liquidity crisis in banks.
Experts opined that higher borrowing from BB would fuel the already elevated inflation further.
The revenue board collected Tk 90,901 crore in July-October of FY23, growing by 14 per cent year-on-year, though it requires a 22.66 percent growth to achieve the actual target of FY23, provisional data from NBR showed.
NBR collected Tk 3,01,634 crore revenue last fiscal year while for the running financial year, it has set a target of Tk 3,70,000 crore.
Meanwhile, according to the BB, the government borrowed Tk 22,863 crore directly from the central bank during the first four months (July-October) of current financial year. In July-October of FY22, the government did not borrowed rather repaid Tk 9,998 crore.
However, it borrowed Tk 31,403 crore in FY22.
“The borrowing from the central bank means one kind of printed money which is being injected into the market,” said Zahid Hussain, a former lead economist of the World Bank’s Dhaka office.
He said, “The printed money has already crossed the target. If the process continues, it will be tough to contain the already elevated inflation in near future.”
The provisional data shows the NBR saw slow growth in income and travel tax revenues and export-import in October. It also witnessed a negative growth in export and import stage revenue in September this year.
The board earned Tk 7,591 crore and Tk 7,481 crore from import and export revenue respectively in September and October, growing negative 1.47 per cent and 5.6 per cent successively while the income tax and travel wing saw 7 per cent growth during September-October period this year.
Meanwhile, the Value-added Tax (VAT) wing exceeded its target for the last two months and experienced a comparatively healthy growth of around 16 per cent in September and October.
During the first four months of FY23, the NBR earned the highest revenue of Tk 34,184 crore from local VAT, followed by Tk 29,936 crore in import and export stage and Tk 26,780 crore from income and travel tax, while the targets were Tk 34,225 crore, Tk 34,739 crore, and Tk 28,342 crore respectively.
In July-October this year, the board witnessed 16 per cent growth in local VAT, 13 per cent in export and import stage and 12 per cent in income and travel tax while it had seen 14 per cent rise in local VAT, 21 per cent in export and import stage and 9 per cent in income and travel tax compared to the same period last year.
The NBR officials said the revenue collection was affected due to the government’s strict measures in releasing project funds. Increasing letter of credit (LC) margins for luxurious products in the wake of dwindling forex reserves decreased imports, diminishing import and export revenues, they said.
Terming government project fund disbursement a big source of revenue, they noted that a downward trend in import due to dollar crunch is also one of the main reasons behind the revenue fall in import stage.
Import increases but tax collection declines
During July-September, the first quarter of FY23, import payment increased by 11.7 per cent to $19.35 billion, compared to same period of previous year.
Economist Zahid Hussain said, “Under-invoicing and leakage may cause revenue short fall in import and export stage.”
“If the import payment decreases how the VAT collection sees a healthy growth, Hussain questioned, adding that the L/C settlement increased sharply in July-September period,” he added.
The economist said, “The revenue will fall this year due to economic strain but the significant fall in export and import stage is a matter of concern.”
