The National Board of Revenue (NBR) achieved a remarkable milestone by collecting Tk 20,561 crore in revenue during the first month of FY2023-24.
This achievement marks a significant surge of over 15 per cent when compared to the corresponding period of the previous financial year.
Although the set target for July 2023 was Tk 22,427 crore, the revenue board successfully secured 91 per cent of this target, showcasing a substantial improvement from the 86 per cent achieved during the same month the prior year, according to the provisional data of NBR.
The nation’s revenue trajectory was undoubtedly influenced by the restoration of macroeconomic stability, an upward trend in government expenditure, and the increased momentum of cross-border business operations, as cited by insiders in the field.
During the initial month of FY2023-24, government spending on projects under the Annual Development Programme (ADP) surged to 1.27 per cent, reflecting a significantly accelerated pace compared to the same period in the previous year.
In terms of expenditure, the government demonstrated its commitment by disbursing 42 per cent, equivalent to Tk 1,034.05 crore more than the figure from the corresponding month of the preceding year. This contrasts with the ADP implementation figures of 0.96 per cent in FY23 and 1.14 per cent in FY22.
The setbacks faced in the preceding year, stemming from the Russia-Ukraine war and the prolonged aftermath of Covid-19, led to corporations and businesses struggling to regain their pre-pandemic positions. Furthermore, a scarcity of forex impacted the government’s project funding, culminating in a deficiency in revenue collection, as explained by NBR officials.
The revenue collection landscape presents notable figures, with Tk 7,654 crore garnered in Value Added Tax (VAT) at the local level, showcasing a 21.51 per cent increase in comparison to the previous year’s July statistics.
The customs wing experienced a substantial growth rate of around 14 per cent year-on-year for July, a notable contrast to the mere 4 per cent witnessed in the previous fiscal year. Impressively, the customs wing exceeded its actual target, collecting Tk 7,693 crore against the set target of Tk 7,162 crore.
Similarly, income tax exhibited a 9 per cent growth in July of the current fiscal year, a slight reduction from the 10 per cent growth observed in FY23.
In July of FY24, NBR successfully collected Tk 5,213 crore, a commendable achievement despite falling short of its actual target of Tk 7,281 crore.
Challenges on the horizon in FY24
The ongoing Russia-Ukraine war, coupled with the country’s forex constraints and government-driven austerity measures to safeguard the economy, has cast a shadow on the growth of tax revenue collection.
Setting an ambitious goal, the government aims for the NBR to amass revenue of Tk 4,30,000 crore in FY24, reflecting a substantial 16 per cent increase of around Tk 60,000 crore from FY23.
Concurrently, the NBR is tasked with adopting tax revenue measures that would contribute an additional 0.5 per cent of tax-to-GDP in the FY24 budget.
Despite these goals, experts and NBR officials acknowledge the uncertainties that may impact revenue collection due to macroeconomic headwinds. The downward trend in imports, which significantly affects the production sector, has raised concerns.
The introduction of conditions on imports by the government and Bangladesh Bank has led to a 42.98 per cent decrease in the opening of Letters of Credit (LCs) for imports in July of FY2023-24, compared to the corresponding month in the previous year. This measure was implemented to stabilise declining foreign exchange reserves.
The latest data from BB indicates that the value of LCs opened in July stood at $4.42 billion, a significant drop from $6.32 billion in the same month of FY23. Additionally, LC settlements decreased by 25 per cent to $5.77 billion in July, down from $7.70 billion in the same month of FY23.
Safeguarding stable imports of raw materials and consumable items, mitigating the existing dollar crisis, and ensuring an adequate supply of fuel for uninterrupted production are deemed crucial prerequisites for achieving the projected revenue targets, as emphasised by NBR officials.
