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Revenue deficit widens despite modest growth

A modest rise in revenue collection in the first six months was not enough to narrow the widening deficit between actual receipt and the ambitious revenue target set for ongoing FY2021 marred by the Covid-19 pandemic.

The government’s revenue deficit compared to the collection target expanded to Tk 317 billion during July-December period of FY21, while the year-on-year revenue growth was close to 2.25 percent, suggest the latest data of National Board of Revenue (NBR).

NBR managed to collect Tk 1,095 billion in revenues against its half-yearly collection target of Tk 1,412.25 in the current 2020-2021 fiscal year.  Alongside sluggish business activities at home and abroad amid the potential second wave of coronavirus pandemic, the ambitious revenue collection target has also been blamed for the growing deficit.


The deficit may eventually surpass Tk 800 billion in the current fiscal year, fear NBR officials and economic analysts.

For the last five years, the country has witnessed 10.20 percent average growth in revenues. Despite a slump in revenues in FY20 in the wake of corona onslaught, the government set the collection target at Tk 3.30 trillion, a staggering 51 percent increase over last fiscal’s collection.

In 2019-20 fiscal year, NBR revenue collection slipped to Tk 2,184.20 billion against Tk 3 trillion revised collection target. It was 2.26 percent negative growth year-on-year.

The government collects most revenue from income tax, value-added tax (VAT) and duty on imports.

Despite some signs of a turnaround, local economy and businesses are yet to regain their pre-covid-19 pace, which has reflections on very slow growth in revenue earnings, according to NBR officials and economic analysts. After some frantic efforts, NBR managed to post a marginal growth in six months even though December month’s nearly 6.5 percent growth.  “The ground reality has not been taken into account while the revenue collection target this year. So, the deficit is gradually widening,” commented Dr Ahsan H Mansur, executive director of Policy Research Institute (PRI).

He also believes that the deficit might soar to as high as Tk 800 billion at the end of the current fiscal year.


Some business leaders also said that it was not clear to them why the government has set such an ambitious revenue earning target when businesses are industries are still struggling to recoup their corona losses.

Placing first quarterly macroeconomic picture at the Parliament on Wednesday, Finance Minister AHM Mustafa Kamal informed the house that the government total budgetary expenditure stood at Tk 629.14 billion or 11.08 per cent up to September.

It was 7.57 per cent lower than that of previous fiscal’s first quarter, while ADP expenditure slipped 26.26 per cent and operational and other expenditure fell 1.28 per cent during the July-September period.

Low revenues coupled with higher bank borrowing by the government also pushed up public credit flow by 32.02 per cent in the first quarter of the current fiscal year.