IMF’s loan condition Additional Tk 65,000cr to be collected next year07 February 2023
Staff Reporter :
Additional revenue worth Tk 65,000 crore will have to be collected in next fiscal year as per the condition of the International Monetary Fund (IMF) on the domestic revenue mobalisation, according to Policy Research Institute (PRI), Bangladesh.
It said one of the key conditions is an increase in revenue mobalisation efforts of additional 0.5 per cent of GDP annually in next two fiscal years (2023-24 and 2024-25) and 0.7 per cent of GDP in fiscal year 2025-26. The IMF stipulates that Bangladesh tax-GDP ratio should rise from the current 7.8 per cent of GDP to 8.3 per cent in FY24, to 8.8 per cent in FY25 and finally to 9.5 per cent by FY26, the private think-tank disclosed it in a press conference at its head office in the city on Monday.
"Although, there is no clear direction from the IMF to increase revenue but it will come in phase by phase before the budgets. Not under pressure from the IMF, rather, this reform is necessary to increase the NBR's own capacity," the PRI said.
Presenting the key-note paper, PRI Research Director Dr Abdur Razzaque said that the implementation of IMF's reform condition will be challenging but not impossible.
"For this, along with the government's willingness, the political and economical perspective must also be changed," he added.
"Very important is that the National Board of Revenue (NBR) will have to collect additional Tk 65,000 crore in next fiscal year and followed by Tk 1,38,300 crore in 2024-25 and finally Tk 2,34,000 crore in 2025-26 fiscal year," he said.
The NBR has set a target of revenue collection worth Tk 3,70,000 crore for the current fiscal year.
PRI Executive Director Dr Ahsan H Mansur thinks that it would be difficult for the government to implement the reforms in revenue sector in line with the IMF's conditions if the NBR's structural reforms and mindset are not changed.
The IMF loan condition on domestic revenue mobilisation should be considered as part of a home-grown agenda and the tax-GDP ratio needs to go much higher than what has been suggested, he added.
It also suggested for reducing tax exemptions, increasing compliance with the personal income tax system, reforming Value Added Tax (VAT) and increasing compliance with corporate tax.
"Tax exemptions are currently provided to a range of sectors. Its indiscriminate use must be carefully evaluated and should immediately be brought down to a much lower level. Any tax-exemptions should be allowed only for a short period of time," the PRI said.
"There are two main ways compliance with the personal income tax system could be improved. First is to increase the payment rate of people already registered to pay tax and second is to increase the number of people who are registered," the PRI added.
Bangladesh weak revenue generation abilities have kept its poor and vulnerable population groups underserved, failing to address the growing inequality in the society, the PRI said.