Editorial, News & commercial office:
55/A, H M Siddique Mansion (Level-7), Purana Paltan, Motijhel C/A, Dhaka-1000. Phone: +8802226640056,
e-mail: [email protected], [email protected]
The government is facing mounting financial pressure as revenue collection continues to fall short of expectations, widening the budget deficit.
Instalments of loans from the International Monetary Fund (IMF) are also being delayed due to unmet conditions, leaving the state with limited fiscal space for expenditure.
As a result, the government is increasingly relying on borrowing. It has already taken a record amount of loans from the banking sector and has sought more than $3.25 billion in fresh loans from development partners. Meanwhile, soaring global fuel prices have reduced the government’s ability to sell fuel domestically at subsidised rates, forcing it to raise prices in the local market.
Despite weak revenue inflows, the government is preparing an ambitious budget for the upcoming fiscal year. Expenditure, however, remains unavoidable, with debt servicing obligations—both domestic and foreign—continuing to rise. Data suggests the government is now operating under constraints comparable to a financially stretched middle-income household.
According to the National Board of Revenue (NBR), the revenue shortfall for the first eight months of the current fiscal year stood at Tk71,472 crore. Against a target of Tk325,802 crore, only Tk254,330 crore has been collected—around 22 per cent below target. Although nearly Tk300,000 crore needs to be collected in the remaining four months to meet the goal, the reality appears far from achievable. Monthly collections have not exceeded Tk40,000 crore so far, while more than Tk75,000 crore per month would be required to meet the target.
All three major revenue heads—income tax, VAT and import duties—have underperformed, with a particularly large gap in income tax collection. A significant number of taxpayers remain outside the tax net. Of approximately 12.8 million Taxpayer Identification Number (TIN) holders, only 4.6 million have filed returns, highlighting structural weaknesses in the tax system. Lower import duty collection and sluggish business and development activities have also contributed to reduced VAT receipts.
Despite declining income, government expenditure remains high, covering salaries and allowances for public employees, infrastructure development and other sectors—even after austerity measures. With revenue underperforming, the government has been compelled to borrow heavily from the banking system.
Data from Bangladesh Bank shows that government borrowing from banks has surged to nearly Tk109,000 crore in just nine months of the fiscal year, already exceeding the annual target. Around Tk56,000 crore was borrowed between January and March alone. Analysts warn that continued reliance on bank borrowing could crowd out private sector credit, dampening investment and employment, and ultimately slowing GDP growth.
External borrowing is also on the rise. According to the Economic Relations Division (ERD), Bangladesh’s total foreign debt now exceeds Tk23,00000 crore. Even so, the government has sought an additional $3 billion from development partners.
