The recent political uproar and change of power have significantly impacted the country's revenue sector. The financial sector is struggling to recover from the chaos left by the ousted autocracy. The finance department acknowledges that the interim government must build substantial momentum to address these challenges. Additionally, the ongoing trade deadlock continues to hinder the revenue sector's recovery.
According to data from the National Board of Revenue (NBR), the revenue deficit for the first four months (July to October) of the 2024-25 fiscal year reached Tk 30,768 crore.
The pressure to repay foreign debt continues to mount, compounded by a persistent dollar crisis. At the same time, budget implementation faces significant hurdles due to shortfalls in revenue collection, administrative inefficiencies, and stagnation in the banking sector. To address these challenges, the government is striving to maximize the use of all available resources—both domestic and international—to boost income. This information comes from sources within the Finance Department and the National Board of Revenue (NBR).
Additional funds are required to sustain the reform programs initiated by the interim government, which were not previously accounted for in the budget. Consequently, these expenses must now be incorporated. Furthermore, the implementation of large-scale annual development programs is hindered by low revenue, leading to a growing reliance on both domestic and foreign loans.
The government has already borrowed Tk 59,516 crore from the banking system in the first four months of the financial year, with the majority of this amount going to Bangladesh Bank to repay existing loans. Consequently, the government is under pressure to generate revenue from both domestic and foreign sources. Stakeholders believe failure to do so could jeopardize budget implementation. To address this, the government has directed the National Board of Revenue (NBR) to boost collections while ensuring taxpayers are not subjected to undue harassment.
Financial adviser Salehuddin Ahmed stated that while the budget will be slightly reduced, public expenditure cannot be cut at this time. Both the development and revenue budgets will see modest reductions.
Economic activities nationwide were significantly disrupted by the quota movement that began in July, followed by widespread protests lasting until the first week of August. Prior to the fall of the Sheikh Hasina government on August 5, a curfew was imposed alongside multiple days of general holidays. During this period, factories and both public and private offices were closed, severely affecting the collection of duties and taxes.
Although the new government was formed on August 8, uncertainty persisted in many sectors, with various professional groups voicing demands. This unrest hindered the collection of the necessary revenue, according to customs and tax officials. The National Board of Revenue (NBR) anticipates that this situation will persist in the coming days.
NBR believes there is potential for positive change in revenue collection after the second quarter, provided administrative reforms are implemented effectively.
Meanwhile, the World Bank and the Asian Development Bank (ADB) are preparing to present a $1.1 billion budget support proposal for Bangladesh to their boards, according to Ministry of Finance officials.
The finance department hopes to secure the funds next month, which, if approved, could help alleviate the country's ongoing economic crisis. Talks on loans aimed at accelerating financial sector reforms and easing pressure on reserves have already concluded. These loans include $500 million from the World Bank and $600 million from the ADB. Both proposals are expected to be approved in board meetings scheduled for December, with the funds potentially available by the end of the month, the finance department said.
Bd-pratidin English/ Jisan
