• Sunday, Oct 17, 2021
  • Last Update : 06:07 pm

Economy faces challenges of revenue shortfall, default loans

  • Published at 06:12 pm September 11th, 2021
No one really knows how the economy will evolve because no one really knows how the pandemic will evolve
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According to a budgetary document, revenue deficit and increasing unrealised loans in the banking sector are hurting the economy

Revenue deficit, defaulting bank loans and worsening poverty situation due to Covid-19 are causing some problems in the country’s economy.

According to a budgetary document, revenue deficit and increasing unrealised loans in the banking sector are hurting the economy.

It also stated that the poverty situation is also a matter of future concern.

The target of revenue collection for the running fiscal has been set at Tk 330,078 crore.

VAT wing will contribute the lion share with Tk 127,745 crore and the target for Income Tax and Tax on Profit has been set at Tk 104, 952 crore.

The revenue collection from import duty will be Tk 37, 907 crore, Tk 54,465 crore from Supplementary Duty, Tk 56 crore from export duty, Tk 3825 crore from Excise Duty while Tk 1050 crore from other taxes and duties.

In the last fiscal (2020-21) the revised revenue target was Tk 301,000 crore while it was set Tk 330,000 in the main budget.

But the NBR could not attain the revised target mainly due to the ongoing pandemic that forced the government to impose various types of lockdown that hampered the economy a lot.

According to the available data, the revenue collection in 2020-21 fiscal was Tk 41,000 crore less than the revised target while Tk 70,000 was from the original target.

The collection was Tk 259,900 crore although the growth was 19%.

According to data, the tax to GDP ratio of the country has been 9.9% on an average since 2015-2019, while it is 19.8% for India, 23.9% for Nepal, 14.7% for Pakistan, 13.5% for Sri Lanka.

The ratio is 25.6% for developing countries and 35.9% for developed countries, according to the data.

The tax-to-GDP ratio is a ratio of a nation's tax revenue relative to its gross domestic product, the value of goods and services produced in a country during a certain period. The ratio is also a marker of how well the government controls a country's economic resources.

The document mentioned that due to increasing revenue deficit it is becoming tougher day by day for very necessary public expenditure financing in various sectors like infrastructure, health, education, water resources and social safety net.

It also said that in the banking sector especially in the public banks high rate of unrealised loans is creating pressure on the economical situation of damaged banks and causing hurdles to collect deposits.

On January 25, 2021, Finance Minister AHM Mustafa Kamal in Parliament said that there are more than 300,000 loan defaulters in various banks and financial institutions across Bangladesh.

As of October 2020, there were 334,982 loan defaulters across the country.

However, the amount of non-performing loans (NPLs) has gone down by Tk 17,737 crore.

As of September 2020, the amount outstanding loans stand at Tk 94,440.47 crore, per Bangladesh Bank data, the minister mentioned.

Due to the prevalence of the Covid-19 pandemic, the official document said, deferral facility has been provided for loan classification for a period of one year from January 1, 2020 to December 31, 2020.

To facilitate the repayment of outstanding loan instalments, from January 2021, the borrowers have been given an opportunity to increase the term of the existing unclassified term loan account by a maximum of 50%.

As a result of these initiatives, classified loans have declined compared to that of the previous year.

The budgetary document also said that Bangladesh has achieved significant progress in reducing poverty to 20.5% by 2019.

“Covid-19 pandemic made slight obstacle in attaining this achievement,” it said.

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