Govt may miss IMF’s revenue collection target

Bangladesh is unlikely to fulfil the revenue collection target set by the International Monetary Fund (IMF) as part of its conditions for the fourth tranche of a $4.7 billion loan programme.

The target is measured through the performance of both revenue collection by the National Board of Revenue (NBR) and non-NBR taxes.

As per the IMF target, the government was supposed to collect Tk 394,530 crore in taxes in fiscal year 2023-24.

According to the NBR's provisional data, the tax administrator collected Tk 371,842 crore in FY24 against a collection target of Tk 410,000 crore in the revised budget.

On the other hand, the collection target for non-NBR taxes was Tk 19,000 crore in the revised budget.

Although data for non-NBR tax was not available for the entire fiscal year, finance ministry statistics showed that only Tk 5,109 crore was collected as non-NBR taxes in the first eight months of the last fiscal year.

This means that even if the target set in the revised budget is met, it will still not be possible to meet the revenue collection target set by the IMF.

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In FY23, only Tk 7,978 crore was collected as non-NBR taxes.

Finance ministry officials said the country may fail to meet the target for revenue collection but it had already met the target for forex reserves.

Bangladesh was tasked with keeping net international reserves (NIR) of $14.79 billion on June 30. On that date, Bangladesh had an NIR of $16.7 billion.

Prior to that, the country had failed to fulfil the NIR target ahead of each instalment of the loan.

The country could achieve the target for the first time after record budgetary assistance from global creditors as several bilateral and multilateral lenders approved $4.8 billion in June alone.

The IMF approved the $4.7 billion in January last year.

In its first review, Bangladesh failed to fulfil the conditions for both revenue collection and NIR.

As a result, Bangladesh sought a waiver from the global lender's board against the two key conditions.

In the IMF's second review, which was based on the performance of December last year, Bangladesh successfully fulfilled both targets as the NIR target was revised down to $14.78 billion from $20.10 billion.

In May this year, Bangladesh also requested the IMF to revise down the revenue collection target but the lender did not do it.

An IMF mission is likely to visit Bangladesh to review the conditions by the end of this year. The fourth tranche is expected in December this year.