Bangladesh’s fiscal position is under pressure as revenue collection falls sharply short of targets, raising concerns over macroeconomic stability and government spending.
Provisional data from National Board of Revenue (NBR) shows a shortfall of Tk97,990 crore in the first nine months of FY 2025–26, the highest for any comparable period.
The gap has already exceeded the previous full-year record shortfall of Tk92,626 crore in the last fiscal year.
Revenue collection during July–March stood at Tk2.88 lakh crore against a target of Tk3.86 lakh crore, achieving 74.6 per cent despite an 11.15 per cent year-on-year increase.
The shortfall is expected to constrain development spending, potentially delaying infrastructure projects and weakening growth momentum.
All three major revenue streams recorded large gaps.
Import and export duties collected Tk80,223.17 crore against a target of Tk1,03,196.01 crore, leaving a deficit of Tk22,972.84 crore.
Domestic value-added tax (VAT) reached Tk1,09,138.25 crore against a target of Tk1,43,538.36 crore, creating a gap of Tk34,400.11 crore.
Income tax and travel tax collections stood at Tk98,501.17 crore against a target of Tk1,39,118.23 crore, resulting in the largest shortfall of Tk40,617.06 crore.
A 7.21 per cent contraction in imports has reduced customs duty collection, traditionally a key revenue source.
Trade indicators also weakened, with letter of credit (LC) settlements falling 26.6 per cent in March.
Banks settled $4.66 billion in LC payments during the month, down from $6.35 billion a year earlier, reflecting lower import demand and reduced investment in capital machinery and industrial inputs.
March alone recorded a revenue shortfall of more than Tk26,528 crore.
At the same time, government borrowing is rising.
Bangladesh Bank data shows net borrowing from the banking system reached Tk597.56 billion between July 1 and January 4, exceeding 57 per cent of the full-year target of Tk1.04 trillion well before mid-year.
Economists say the widening gap could crowd out private sector credit and increase borrowing costs for businesses.
Zahid Hussain former lead economist World Bank Dhaka office said revenue targets were unrealistic and collection inefficiencies remain.
“The revenue collection targets set were not realistic. Moreover, what is collected does not always reach the government treasury,” he said.
“As a result of low collection, government borrowing is increasing, which is reducing the credit flow to the private sector,” he added.
He also warned of uncertainty in securing foreign loans, adding further risks to the economy.
Improving administrative efficiency alone will not be sufficient, he said, calling for a sustained strategy for resource mobilisation.
“Past initiatives to boost revenue failed to sustain, often due to a lack of political will. Impartial and consistent measures are needed for the broader welfare of the state,” he added.
Rising deficit financing could also fuel inflation if supported by central bank funding, while limited fiscal space may restrict expansion of social safety programmes.
M Masrur Reaz chairman Policy Exchange of Bangladesh said structural reforms in tax administration, expansion of the tax base and recovery in import demand will be critical to stabilise public finances in the coming months.
