Revenue-GDP ratio

Bangladesh behind Nepal and Laos

Although Bangladesh along with Nepal and Laos will graduate from the Least Developed Country (LDC) status to developing countries in 2026, Bangladesh is behind the two countries in revenue-GDP ratio, according to the finance ministry.

This gloomy picture has been mentioned in the mid-term macro economic policy statement of the ministry.

The strength of the developing countries will be to collect a big amount of revenue, graduating from the LDC status.

The revenue-Gross Domestic Product (GDP) ratio of Nepal is 22.36 per cent, Laos 15 per cent while the ratio is only 10 per cent in Bangladesh.

If Bangladesh graduates from the LDC category, the country will lose the scope of receiving loans at low interest rates.

So the experts have suggested an increase in revenue collection internally. However, the revenue collection situation is not improving in Bangladesh. Except for the introduction of a VAT law, no reforms have been carried out in the last one decade.

Policy Research Institute (PRI) executive director Ahsan H Mansur said the situation of revenue-GDP ratio is so bad as necessary reforms haven't been carried out.

"We would not have faced the current crisis of economic pressure if a strong revenue collection system had been in place," the economist added.

According to the finance ministry, the revenue-GDP ratio of Bangladesh is also lower than Sri Lanka, Indonesia, Myanmar, Vietnam, India, Philippines, Malaysia, Thailand and Cambodia. The revenue-GDP ratio of these countries is between 11 per cent and 24 per cent.

The National Board of Revenue (NBR) collects 84 per cent revenue of the country. This is a bit above 8 per cent in the NBR tax-GDP ratio.

In the mid-term plan of the finance ministry, the target has been fixed to rise from 8.3 per cent to 9 per cent.

Bangladesh's ratio is lower than the average revenue-GDP ratio of different region of the world.

In 2021, the ratio was 47 per cent in European region. Beside, the ratio is 27 in Latin America and Caribbean region, 22.23 per cent in Middle East and central Asia region.

The ratio is 17 per cent in Sub-Saharan Africa.

The finance ministry itself said Bangladesh is far behind similar countries of LDCs and developing countries.

Speaking to Prothom Alo at his office on Thursday, finance minister AHM Mustafa Kamal said, "NBR has done better in revenue collection. There is scope to collect Tk 1500 billion to 2000 billion more. Steps have been taken to raise tax-GDP ratio from 14 per cent to 15 per cent."

Deficit of Tk 298.21 billion

For the first time, NBR's revenue collection exceeds Tk 3000 billion. However, this is Tk 298.21 billion lower than target.

In the outgoing year of 2021-22, NBR collected Tk 3001.79 billion including VAT. In the previous year, the collection was Tk 2590. 88 billion.

In the current fiscal year of 2022-23, NBR has been given a target to collect Tk 3700 billion.

Economists said the target will not be fulfilled.

According to NBR, in the last fiscal year, a target was set to collect Tk 1280 billion from VAT. A total of Tk 1084.18 billion has been collected.

In import and export level, a target was set to collect Tk 960 billion as duty. A total of Tk 894.24 billion has been collected.

A target was set to collect Tk 1060 billion as income tax and travel tax. A total of Tk 1023.37 billion has been collected.