19% revenue growth needed to meet IMF target for FY24

The National Board of Revenue (NBR) will need to increase its collection by approximately 19% year-on-year in fiscal 2023-24 to meet the target set by the International Monetary Fund (IMF).

According to data from the NBR, revenue in FY23 exceeded Tk1.31 lakh crore, representing an 11% increase compared to the previous year but falling short of the Tk3.70 lakh crore target. The NBR's target for the current fiscal year has been set at Tk4.30 lakh crore.

Economists believe that collecting revenue at such a high rate will be challenging given the NBR's current capacity and economic conditions in the country.

"Reaching this target will not be easy. It will also be difficult to achieve the previous target of Tk3.70 lakh crore," Ahsan H Mansur, executive director of the Policy Research Institute, told The Business Standard.

"NBR does not have the capability to achieve this target. Also, the economic situation is in a bit of a downturn now," he added.

While approving a loan of $4.7 billion for Bangladesh in January, the IMF set several conditions for the country's economic reforms. Some of these include the quantitative performance indicator, which measures the contribution of taxes to GDP, or the tax-to-GDP ratio.

According to the condition, Bangladesh's revenue collection will need to increase by 0.5% to achieve a tax-to-GDP ratio of 8.3%.

Based on last year's GDP size, the IMF has calculated that revenue for the current fiscal year should exceed Tk3.94 lakh crore.

According to sources within the NBR, the lender is seeking information on how the NBR plans to achieve this target. A mission from the agency is currently in Dhaka as part of the initial review of Bangladesh's progress in meeting the conditions for releasing the second tranche of the loan.

Although Bangladesh has already met several conditions, the country has not reached the target for foreign exchange reserves and revenue collection.

The IMF delegation has already held three rounds of meetings with senior NBR officials. Another meeting is scheduled for today.

A senior NBR official, speaking on condition of anonymity, told TBS, "We have been asked to share our revenue collection strategy with them, and we will present our plan during the meeting."

According to sources within the NBR, while it is in a relatively strong position to collect income tax and value-added tax (VAT), there are doubts within the NBR about achieving the target for import duty collection due to a decrease in imports.

Muhammad Abdul Mazid, former NBR chairman, however, notes, "Given the size of the country's economy, the IMF target should be attained."

"We need to achieve this revenue target for our own benefit, not simply because the IMF demands it," he added.