Widening revenue shortfall, declining exports, remittance key concerns: PRI

The country's economy is expected to face more strain in the coming months as revenue shortfall against the target in the current fiscal year continues to widen amid depleting foreign exchange reserves and declining exports and remittance, according to the Policy Research Institute of Bangladesh (PRI).

During a pre-budget press briefing and discussion on Sunday, PRI Executive Director Ahsan H Mansur criticised the government for its lack of action and reliance on mere rhetoric to address the deterioration of confidence in the financial account (interbank borrowing, suppliers' credit).

"The loss of confidence [in the financial sector] will not go away anytime soon as the government did not do anything but rhetoric," said Ahsan, also a former top official of the International Monetary Fund (IMF).

The event, organised by PRI Study Centre on Domestic Resource Mobilisation at PRI's Banani office in the capital, was presided over by PRI Chairman Dr Zaidi Sattar.

Dr Zaidi Sattar said, "In the last 20 to 30 years, our macroeconomic management has been satisfactory. Due to the global situation, our balance of payment is now under pressure. Normally, export proceeds are repatriated to the country within four months, but now the proceeds are not even coming in six to nine months." 

PRI's estimations

According to an estimate by the PRI, in the current FY23, the National Board of Revenue (NBR) may face a revenue deficit of Tk54,600 crore in comparison to its set target.

PRI Research Director Dr MA Razzaque said the revenue collection target for NBR for the current financial year was set at Tk3.70 lakh crore. However, after analysing the collection trends in the first nine months of the ongoing fiscal year (FY), the PRI has estimated that the NBR will be able to collect Tk3.15 lakh crore.

One of the conditions set by the International Monetary Fund (IMF) for lending $4.7 billion to Bangladesh was for the country to increase the tax-to-GDP ratio by 0.5% in the next fiscal.

The international lender had estimated that the NBR may manage to collect Tk3.36 lakh crore in this fiscal. As per PRI data, the revenue collection in the current fiscal year will be Tk21,400 crore less than the estimates made by IMF.

The PRI has blamed NBR's overall lack of capacity and implementation of needed reforms for failing to meet the revenue collection target.

Gloomy days ahead 

Mentioning that the lack of confidence in the financial sector is not going to go away anytime soon, and the capital shortage is likely to increase, Dr Mansur said the macroeconomic situation of the country may go out of control in the next five to seven months.

The foreign exchange reserve dropped by $12 billion in the last nine months and it may further decrease by $12 billion in the next fiscal year, he said. 

Ahsan H Mansur said the government must take immediate steps to address these issues, especially as the next national election is right around the corner.