Bangladesh revenue up 16% in eight months

Bangladesh's government revenue grew by a healthy 16 per cent in the first eight months of the current fiscal year (2023-24), exceeding the average growth rate of 10 per cent over the past five years. However, despite this positive trend, the National Board of Revenue (NBR) still faces a significant revenue shortfall.

The February collection surge of over 19 per cent was the second-highest of the year. Analysts attribute this growth to a combination of factors, including rising import prices and improved tax collection efforts.

However, this has not been enough to bridge the gap. The NBR currently faces a shortfall of Tk18,221 crore for the eight-month period, even after a downward revision of the initial revenue target.

Income tax collection has been the bright spot, witnessing a growth rate of around 20 per cent in the first eight months, with February showing a particularly strong increase of 29 per cent.

Analysts suggest that the February growth could be attributed to increased imports ahead of Ramadan.

Even though imports have decreased overall over the past eight months, import tax revenue has increased by roughly 11 per cent, while VAT revenue has increased by more than 16 per cent.

Recent data from Bangladesh Bank indicates a 4 per cent decrease in letter of credit openings from July to February. Nevertheless, a senior NBR customs official told TBS that increased imports and efforts to prevent false declarations by importers contributed to the growth in import tax collection.

The revenue target for the NBR in the current fiscal year was initially set at Tk4,30,000 crore. Achieving this goal would require a growth rate of around 30 per cent compared to last year's collection, a rate never seen before in Bangladesh.

To adapt to this challenge, the target has been reduced by Tk20,000 crore to Tk4,10,000 crore.

NBR sources revealed that in the first eight months of the fiscal year, revenue collection amounted to Tk2,26,586 crore. With four months remaining, more than Tk1,83,000 crore will need to be collected to meet the revised target.