Mounting fiscal challenges loom as NBR falls short of revenue target: GED
It raises alarms over eroding purchasing power as wage growth continues to trail inflation
Mounting fiscal challenges are emerging for Bangladesh as the National Board of Revenue (NBR) collected only 70.48% of its revised revenue target in January, according to the latest Economic Update and Outlook published by the General Economics Division (GED).
The report, prepared by the GED under the Bangladesh Planning Commission, shows that the revenue authority could collect Tk37,033 crore against a revised monthly target of Tk52,545 crore, resulting in a significant shortfall of Tk15,512 crore.
The deficit was spread across all major wings: collections from import and export duties fell short by Tk4,914 crore, domestic Value Added Tax (VAT) by Tk5,199 crore, and income tax, including travel tax, fell behind by Tk5,399 crore.
The GED noted that while the NBR recorded a marginal month-on-month growth of 2.3% from last year's December's Tk36,191 crore and a year-on-year increase of 3.81% compared to January 2025, the figures remain well below the required trajectory.
This underperformance comes as the government recently upwardly revised the total revenue target for the fiscal 2025-26 to Tk5.54 lakh crore, an increase of Tk55,000 crore from the initial estimate of Tk4.99 lakh crore.
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The GED report underscored that this revenue shortfall, combined with a weak mid-year Annual Development Programme (ADP) utilisation rate, presents mounting fiscal challenges for Bangladesh.
The slow pace of the ADP was attributed to weak project preparation, procurement delays, land disputes, and coordination hurdles.
The report cautioned that the current fiscal year may record the lowest ADP implementation rate in recent times.
These fiscal constraints are occurring alongside significant pressure on household purchasing power.
Headline inflation rose to 8.58% in January, consistently outpacing wage growth, which stood at 8.08%.
The GED emphasised that this widening gap since September 2025 is eroding real incomes, particularly for lower-income groups whose spending is concentrated on essential goods.
Despite these domestic pressures, the GED noted some resilience in the external sector.
Foreign exchange reserves reached $33.18 billion in January, bolstered by strong remittance inflows of $3.17 billion and a rise in ready-made garment (RMG) exports to $3.61 billion.
However, the report pointed out that imports of capital machinery remain low, suggesting a continued slump in private investment.
To navigate these challenges, the GED recommended that the new government prioritise institutional coordination and policy consistency.
Key pillars for economic resilience identified include attracting higher investment, generating employment, and reining in inflation through coordinated wage and price management.
The division also noted that the planned rollout of the "Family Card" initiative could be a transformative step in providing universal social protection to vulnerable groups while the government works to restore macroeconomic stability.
Inflationary pressures persist
Inflationary pressures in Bangladesh persisted in January as rising costs of vegetables, fish, and fruits offset the relief from easing rice prices.
Headline inflation edged up to 8.58% in January this year, compared to 8.49% in December 2025.
While non-food inflation moderated to 8.81%, food inflation accelerated to 8.29%, remaining the primary driver of the cost of living.
Food items accounted for 43.06% of the whole headline inflation during the month, up from 40% in December.
Additionally, the GED report highlighted a significant shift in food price dynamics.
Overall rice inflation saw a sharp decline to 7.61% from 11.92% in December, with prices of coarse, medium, and fine rice all moderating.
Eroding purchasing power
The report also raised alarms over eroding purchasing power, as wage growth continues to trail inflation.
In January, wage growth stood at 8.08%, failing to keep pace with the 8.58% inflation rate. This gap has persisted since September 2025, disproportionately affecting lower-income groups who spend the bulk of their earnings on essential goods.
