Government revenue fell by Rs 10,000 crore in July-August due to riots

According to sources from the National Board of Revenue (NBR), state budget revenues fell significantly in the first two months of the current fiscal year (FY25), i.e. in July and August, mainly due to the unstable situation in the country.

Sources said that as per the Integrated Budget and Accounting System (iBAS++) of the Ministry of Finance, the NBR collected about Taka 41,000 crore in the first two months of the current fiscal, missing the target of about Taka 10,000 crore.

That collection is about 7% less than what was collected during the same period last year, based on finance ministry data. But compared to the NBR’s own data from last year, the shortfall is more than 11%.

“There was widespread unrest across the country for most of the first two months of the fiscal year, which adversely affected overall economic activities, including business, resulting in slack in tax collection,” an NBR income tax official told The Business Standard.

The official also noted that iBAS++ calculations for July and August have not yet been fully completed. “Once the entire calculations are finalized, the collection amount may increase slightly. Also, there is usually some slowdown in revenue collection at the beginning of the year,” he added.

Towfiqul Islam Khan, a senior researcher at the Centre for Policy Dialogue, told TBS: “Economic activity was disrupted due to the volatile situation in the first two months, which is one of the main reasons for low tax revenues.

“In addition, the decline in imports during the government’s transition period negatively impacted revenue collection.”

According to data from Bangladesh Bank, the number of opened and settled import letters of credit fell by about 13% in the first two months of fiscal year 2025.

The data showed that import letters of credit worth $10.03 billion were opened in July and August, almost $1.5 billion less than during the same period last year.

The NBR has set a revenue collection target of Tk 4.80 lakh crore for fiscal 2025, with a target of more than Tk 51,000 crore in the first two months.

Towfiqul Islam Khan believes that the current economic situation indicates that the government is likely to miss its revenue target for the current fiscal year. As a result, the target may need to be revised downwards by the end of the year.

However, Salehuddin Ahamed, financial adviser to the Interim Government, recently said the current revenue target would not be lowered.

In recent years, there has been a significant gap between the NBR and finance ministry figures. For instance, in fiscal 2024, the NBR reported a gap of around Tk 19,000 crore compared to the finance ministry figures.

Now the NBR has started using data from the Ministry of Finance, a change that has long been supported by the CPD.

Towfiqul Islam Khan called it a positive step as it will provide more accurate revenue data and help in making decisions on government spending. However, he stressed the need to reform NBR processes to improve revenue collection and ensure transparency and participation.