NBR fails to meet IMF’s target
Muhammad Ayub Ali :
The National Board of Revenue (NBR) has failed to meet the conditions set by the International Monetary Fund (IMF), which could complicate the disbursement of the February installment for the 2024-25 Fiscal Year, according to sources from the NBR.
The IMF had set a target for revenue collection in the current fiscal year, aiming for an increase of 0.5 per cent of GDP, which will be revised to 0.6 per cent in 2025-26 FY. The IMF has also conditioned that financial statements be prepared annually, with tax policy kept separate.
The IMF has sought information from the NBR on how it plans to achieve the increased revenue target for the 2024-25 fiscal year, particularly by reducing tax exemptions. Officials from the Income Tax, Value Added Tax, and Customs wings of the NBR recently met to discuss this. Once the NBR submits its plan, it will be presented to the IMF’s board in Washington.
Former NBR chairman Muhammad Abdul Majid told The New Nation that the IMF set the revenue target assuming a stable economic condition.
However, he noted that the current economic situation is vastly different, as the previous government’s policies had severely affected the economy, which is well known to the IMF.
He argued that fulfilling the revenue target is not possible until the economy stabilises.
He acknowledged that NBR has made significant efforts to increase tax revenue but emphasised that a stable economic environment is crucial for meeting the target.
Majid also stressed that the long-standing demand for a separate tax policy is not only vital to fulfilling the IMF conditions but is also essential for the country’s economic wellbeing.
In response to rising commodity prices, the interim government has introduced various tax exemptions for essential imports, such as rice, oil, eggs, and onions, due to the ongoing economic crisis.
NBR Chairman Md Abdur Rahman Khan stated in a press briefing that the duties would return to previous levels once the situation improves. However, he hinted that some exemptions would be withdrawn soon, with several statutory regulatory orders already cancelled, and more expected.
One of the high officials of NRB, preferring anonymity said, “We have presented all current situation to IFM. We hope there would not any difficulty in obtaining loan disbursement.”
For the current fiscal year 2024-25, the NBR’s revenue collection target for the period from July to October was Tk 1,32,114 crore.
However, the NBR collected only Tk 1,12,881 crore, falling short by Tk 30,833 crore. Revenue collection decreased by Tk 10,55 crore (1.3 per cent) compared to the same period in FY 2023-24, when Tk 1,23,336 crore was collected.
In the first four months of the 2024-25 Fiscal Year, the NBR failed to meet its revenue target in any month. In July, Tk 20,269 crore was collected, against a target of Tk 25,569 crore, falling short by Tk 5,300 crore. In August, the collection was Tk 21,629 crore, against a target of Tk 31,607 crore, with a shortfall of around Tk 10,000 crore. In September, revenue collection amounted to Tk 29,200 crore, against a target of Tk 39,324 crore, with a shortfall of Tk 10,000 crore. In October, the NBR collected Tk 27,72 crore, falling short by Tk 8,000 crore from the target of Tk 35,614 crore.
The tax-to-GDP ratio is expected to reach 8.8 per cent by the end of FY 2024-25. To meet this target, the NBR needs to generate an additional Tk 93,000 crore in revenue. A tax-to-GDP ratio of 9.5 per cent is required in the final year of the IMF loan programme (2025-26).