Fiscal resilience must be maintained by tackling politico-bureaucratic hurdles

The recent report from the National Board of Revenue (NBR) paints a concerning picture of Bangladesh’s fiscal health, revealing a significant shortfall in revenue collection that has been exacerbated by political upheaval.

With a decrease of approximately Tk 2,000 crore over the past six months, the implications for the economy are profound, particularly as the nation grapples with the aftermath of the Awami League government’s fall on 5 August last year.

As per a report published in this newspaper, in the first half of the 2024-25 fiscal year, revenue collection reached Tk 1,56,000 crore, a stark decline from Tk 1,57,988.90 crore during the same period last year.

This decline is not merely a statistical anomaly; it reflects the broader economic malaise that often accompanies political instability.

The NBR’s ambitious target of Tk 4,80,000 crore for the fiscal year now appears increasingly unattainable, with a shortfall of Tk 58,000 crore already evident.

The data reveals troubling trends across key sectors. In income tax, the NBR collected Tk 52,162.49 crore against a target of Tk 76,67.75 crore, a performance that raises questions about compliance and enforcement.

Customs revenue also fell short, with Tk 49,800 crore collected against a target of Tk 61,952 crore.

Perhaps most alarming is the decline in VAT collection, which dropped from Tk 58,360.42 crore last year to Tk 55,177 crore this year, despite a target of Tk 76,317.35 crore.

These figures underscore the urgent need for a strategic reassessment of revenue policies.

The NBR must not only address the immediate challenges posed by political instability but also work towards creating a more resilient tax system that can withstand such shocks in the future.

This includes enhancing taxpayer education, improving compliance mechanisms, and streamlining processes to reduce bureaucratic hurdles.

Moreover, the government must recognise that a stable political environment is crucial for economic growth and revenue generation.

As the nation moves forward, political leaders must prioritise stability and governance, fostering an environment conducive to financial recovery.

The NBR’s report serves as a clarion call for action. It reminds us that fiscal health is intrinsically linked to political stability and that both must be nurtured to ensure Bangladesh’s prosperous future.