The National Board of Revenue (NBR) has fallen short of its nine-month tax collection goal by nearly Tk 1 trillion, resulting in a need to gather over Tk 2.6 trillion in the final quarter of the fiscal year 2025-26 (FY26).
Recent provisional figures revealed that from July to March, collections amounted to Tk 2.87 trillion, showing an 11 percent increase compared to the previous year. However, this was significantly below the pace necessary to achieve the full-year target of Tk 5.54 trillion.
Experts are skeptical about the board’s ability to collect almost half of the annual target within just three months, considering its historical trend of missing targets for over a decade. Despite a positive start last year, with strong first-quarter collections prompting an upward revision of the target to Tk 4.99 trillion, the board continues to struggle.
The revenue shortfall occurs amid a challenging economic environment, with the country’s GDP growth slowing to 3.03 percent in the second quarter of FY26. Additionally, defaulted loans in the banking sector have surged to Tk 5.45 trillion as of December 2025.
Finance Minister Amir Khosru Mahmud Chowdhury highlighted the declining tax-to-GDP ratio, dropping below 7 percent from around 11 percent. He expressed concerns about the state of businesses and the impact of external factors like the US-Israel war on Iran, which has led to increased energy import costs.
To address the revenue challenges, the government is seeking budget support from development partners and enacting structural reforms. Plans include aiming for a trillion-dollar economy by 2034 through investments, employment initiatives, and macroeconomic stability.
Due to consistent revenue shortfalls, the government has heavily relied on borrowing, with net deficit financing reaching Tk 1.05 trillion from July to February, a 67 percent increase from the previous year. This has raised concerns about fiscal sustainability and the potential impact on private sector credit availability.
Experts caution that without significant reforms in revenue administration, achieving substantial revenue growth will be nearly impossible. The reliance on deficit financing for development spending may further strain the economy and hinder private sector investment.
Looking ahead, the NBR is considering structural changes for the next fiscal year, including strengthening enforcement to combat tax evasion, reducing tax exemptions, and introducing new taxes targeting wealth and inheritance. These measures are part of a broader strategy to enhance revenue collection and address the ongoing fiscal challenges.
