[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Simplifying NBR service delivery

The provision of submitting Proof of Submission of (Tax) Return (PSR) as a prerequisite for accessing various services from the government departments and financial institutions incorporated by the National Board of Revenue (NBR) during the pre-interim government period still remains intact. Eviden

thefinancialexpress.com.bd

Simplifying NBR service delivery

Published :
Jun 11, 2025 00:53
Updated :
Jun 11, 2025 00:53

The provision of submitting Proof of Submission of (Tax) Return (PSR) as a prerequisite for accessing various services from the government departments and financial institutions incorporated by the National Board of Revenue (NBR) during the pre-interim government period still remains intact. Evidently, the idea behind this arrangement was to broaden tax coverage and ensure compliance from eligible taxpayers. In November last, the NBR made submission of PSR mandatory for accessing 43 services so that, as the head of the tax authority then told reporters at a briefing, the move would help increase the number of Taxpayer Identification Number (TIN) holders as well as income tax return submissions. So far 45 services have been brought under the mandatory PSR rule.

However, in the proposed budget for the next fiscal year (FY 2025-26), the government has made some relaxations. At least 12 services would hence be exempted from the mandatory PSR-related formalities. Accordingly, submission of TIN certificate, not the entire tax return documentation, will be enough for anyone to avail of 12 services. The reason given for this change in the existing requirements for the said services is that the provision of submitting PSR proved to be unnecessary hurdles to delivering certain services. So, the 'illogical' requirements have been removed from delivery of those services. Notably, the services under consideration include, among others, renewal or issuance of a credit card, obtaining a trade licence under the city corporations and municipalities, getting an e-commerce business licence, gaining membership of various professional bodies, opening a post office savings account exceeding Tk500,000 and so on.

Clearly, the specific services exempted from mandatory PSR submission points to the fact that the argument of PSR-compliance to widen tax net and hence revenue collection was not essentially factual. In fact, compulsion in an overwhelming number of cases has proved ineffective simply because the NBR machinery is not up to the task. Evasion of tax by wealthy taxpayers is mostly facilitated by corrupt elements in the tax administration. Also, tougher rules and the attendant hassles and harassments have discouraged many potential taxpayers to obtain a TIN certificate in the first place. Unsurprisingly, Bangladesh's current tax-to-GDP ratio is 7.4 per cent---the lowest in South Asia with 12.5 per cent in India, 17.5 per cent in Nepal and 12.3 per cent in Bhutan.

However, a 9.0 per cent (total projected revenue collection at Tk 4.99 trillion) rise in revenue collection has been projected in the FY26 budget, marking a 7.6 per cent increase over the revised target of the current fiscal year. Arguably, the NBR's departure from the PSR requirement for listed services implies that the philosophy of compliance to ensure better tax collection has undergone a qualitative shift. This is undoubtedly a move in the right direction. More than relieving the burden of supplying a pile of documents for securing a government service, the easing of PSR-related preconditions would go a long way in simplifying the revenue collection procedure. In that case, such streamlining of service delivery will not only be of help to recipients of services, but will also make the tax collection procedure more efficient and taxpayer-friendly. Hopefully, the government or for that matter the tax authority would rethink the entire strategy of service delivery in favour of a simpler and hassle-free procedure in the interest of taxpayers.​

 

[Saif]

Govt gearing up to tackle 3 fiscal risks

A model study forearms the government to face three major risks to Bangladesh's fiscal outlook from macroeconomic volatility, sovereign guarantees extended to state-owned enterprises (SOEs) and disaster-related shocks. According to risk analytics laid down in the latest budget document, unde

thefinancialexpress.com.bd

UNFORESEEN MACROECONOMIC, SOE, CLIMATIC UPSETS
Govt gearing up to tackle 3 fiscal risks

Jasim Uddin Haroon
Published :
Jun 13, 2025 00:48
Updated :
Jun 13, 2025 00:48

A model study forearms the government to face three major risks to Bangladesh's fiscal outlook from macroeconomic volatility, sovereign guarantees extended to state-owned enterprises (SOEs) and disaster-related shocks.

According to risk analytics laid down in the latest budget document, under the macroeconomic category, the main concerns are inflation, exchange rate volatility, and export performance.

The Finance Division analysed these risks using a customised tool called Financial Programming and Policy Model, developed by the International Monetary Fund (IMF).

The model suggests a spike in inflation would lead to reduced government spending capability.

With lower expenditure, the fiscal deficit narrows, improving the overall budget balance and helping reduce public debts, according to the analysis.

However, in the case of a policy-rate shock, that is, an increase in interest rates, the model forebodes significant spikes in interest payments with a resultant worsening of the fiscal balance.

Government expenditure is projected to increase rapidly in this scenario on the financial front of the economy.

Regarding exchange-rate shocks, the model indicates that depreciation of the local currency could improve government's fiscal position as a percentage of nominal GDP.

However, it would also increase foreign interest payments and create inflationary pressures on the economy.

"A close relationship was observed between exchange-rate depreciation and annual average point-to-point inflation in the country," it is stated in the analysis.

Potential risks concomitant with the recently adopted floating exchange-rate regime are also taken into account in doing the risk arithmetic.

And a predicted end-result is that the overall impact on public debt and government expenditure would remain moderate.

"Given the steady inflow of remittances, along with moderate export growth and controlled import expansion, the shift to a market-based exchange system is not expected to significantly affect government's fiscal position in the medium term," the risk analytics notes.

Taking into account the recent tariff hikes imposed by the U.S. administration, the official analysts also examined how export shocks affect public finance and the real economy.

They observe that public expenditure tends to rise being fed by export shocks.

The analysis further highlights fiscal risks stemming from sovereign guarantees provided to SOEs.

The government issues sovereign guarantees for loans negotiated by various state-owned enterprises. As of the end of FY2024-25, the total outstanding sovereign guarantees accounted for Tk 1,190.82 billion or over Tk 1.19 trillion.

Natural disasters, particularly floods, were also flagged as a key Achilles' heel in the fiscal ecosystem drawn up by the post-uprising government in the process of economic rebound.

The analysis forecasts disasters could damage infrastructure, reduce agricultural output, and lower private consumption, all of which contribute to a wider fiscal deficit.

However, the impact on the ready-made garment (RMG) sector -- Bangladesh's prime export earner -- is expected to be minimal.​

 

[Saif]

Govt scraps dozen misdirected income tax write-off SROs

A dozen income-tax write-off SROs have been scrapped by the interim government in a fiscal measure meant for enhancing state revenues and enforcing tax transparency, as the generosity was allegedly misdirected. A major perverse use of the benefits was found to be legalizing 'black money' t

thefinancialexpress.com.bd

BOOSTING REVENUE, TAX TRANSPARENCY
Govt scraps dozen misdirected income tax write-off SROs

Jasim Uddin
Published :
Jun 13, 2025 00:54
Updated :
Jun 13, 2025 00:54

A dozen income-tax write-off SROs have been scrapped by the interim government in a fiscal measure meant for enhancing state revenues and enforcing tax transparency, as the generosity was allegedly misdirected.

A major perverse use of the benefits was found to be legalizing 'black money' through investing in tax-exempt or low-tax ventures like fisheries and agriculture by those who have no relation with such sectors.

The cancellation of the 12 Statutory Regulatory Orders (SROs) on the direct taxation has been incorporated into the new budget for financial year 2025-26 to bring transparency in the tax system and prevent the "misuse of fiscal facilities".

This move, unveiled by Finance Adviser Dr Salehuddin Ahmed, signals a clear intent to broaden the tax base, reduce discretionary exemptions, and improve the overall efficiency in revenue collection.

According to National Board of Revenue (NBR) sources, among these regulatory orders, destined for clear-out from 1 July 2025, are those on tax exemptions for donations to several institutions, including the Bangabandhu Memorial Trust.

Additionally, various SROs offering tax largesse for agriculture and livestock have been revoked in recent years following allegations of benefit misuse and resultant revenue losses.

Experts believe the rollback of these income- tax SROs is a bold statement from the government, "prioritising robust revenue generation and a more transparent tax landscape for the benefit of the national economy".

These SROs were reportedly issued or extended due to negotiations by politicians during the previous regime.

It is a key component of the post-uprising government's broader tax-reform agenda, aimed at creating a more predictable and equitable taxation environment.

For years, numerous SROs have allowed for a multitude of exemptions and pared-down tax rates, often criticised for creating loopholes and hindering revenue generation. By streamlining these provisions, the government expects to unlock significant revenue potential and curb tax evasion.

Finance Adviser Dr Ahmed, in his budget speech, underscored the importance of this measure in achieving government's revenue targets and enhancing the nation's economic stability. While the budget also includes adjustments to tax-free income ceiling and new tax slabs, the cancellation of SROs is particularly noteworthy for its direct impact on transparency.

Below is a brief overview of some of the cancelled SROs and their primary benefits.

Under an SRO issued on March 9, 2009, the government offered tax exemption on donations to three specific institutions: Bangabandhu Sheikh Mujibur Rahman Memorial Trust, Rafatullah Community Hospital (RCH) Bogura, and Salvation For Discovery Hospital, Manikganj. NBR officials cited controversial and political affiliations as the reason for the cancellation of this facility.

Another SRO, dated January 2, 2013, offered tax waiver on donations to the 'Dhaka School of Economics Foundation'. However, there have been allegations of misuse of charitable donations and tax evasion associated with this SRO.

Similarly, an SRO, dated July 1, 2015, offered reduced tax on income from over 12 sectors, including agriculture, poultry, fish, flowers, silk, and mushrooms, ranging from 3-15 per cent. Another SRO, dated August 18, 2015, offered tax exemption on income from fisheries, poultry, and hatcheries, with zero-rated tax on the first quantum of Tk 1.0 million. There have been longstanding allegations of misuse of these benefits by high-income groups, primarily politicians, for 'whitening' undeclared income -- commonly known as black money.

In the new budget, the government, on the other hand, has increased the tax exemptions for marginal farmers, raising the income-tax threshold from Tk 200,000 to Tk 500,000.

The rest of SROs offer tax exemption on natural gas, on donations to 'Gafur Mariam Sattar Saqera Foundation', phased tax exemption on income from poultry and fish farming (zero to 15 per cent), Withholding tax on savings certificates, savings deposits, and export-based cash assistance is considered final and exempted from additional tax liability.

The SRO-borne facility for withholding tax on property transfers is considered final, having no additional tax liability, and so is tax exemption on imported parboiled and non-parboiled rice.

And an amendment to the Seventh Schedule of the Income Tax Act 2022 establishes special tax rates which often provided tax benefits for investing undisclosed funds.​

 

[Saif]

Card-based forex transactions rise

Foreign currency transactions through cards reached a four-month high in April, reflecting a rebound in international travel and improved economic stability in Bangladesh...

www.newagebd.net

Card-based forex transactions rise
Staff Correspondent 12 June, 2025, 23:11

A file photo shows a salesperson swiping a credit card of a customer through a POS machine in the capital Dhaka. | New Age photo Wellness retreats.

Foreign currency transactions through cards reached a four-month high in April, reflecting a rebound in international travel and improved economic stability in Bangladesh.

According to Bangladesh Bank data, card-based foreign currency transactions totalled Tk 728 crore in April, up from Tk 614 crore in March, Tk 604.19 crore in February, and Tk 681 crore in January.

However, April’s figure remains below the Tk 834 crore spent abroad via cards in December 2024 — the highest of the year.

December 2023 had recorded even higher card-based overseas spending at Tk 929 crore.

With educational institutions in Bangladesh closed during this period, many people travel abroad with their children, contributing to the rise in foreign currency transactions via cards, bankers said.Bangladeshi cuisine recipes

Bankers noted that the foreign exchange transactions by cards depended on availability of dollars and the number of travellers going abroad.

Bankers attribute the April rise to several factors including greater foreign currency availability, increased outbound travel, and seasonal patterns.

They said that due to restricted visa issuance from India, many travellers shifted destinations to Southeast Asia, the Middle East, and Europe for medical, education, and tourism purposes.

Another key driver behind increased card transactions is the improved availability of US dollars in the market.

According to the Bangladesh Bank, the country received $27.5 billion in remittances from July 2024 to May 2025 — 28.7 percent up from $21.37 billion during the same period in FY24.Bangladeshi cuisine recipes

This surge in remittance inflow helped stabilise the dollar market, making it easier for banks to meet the foreign exchange demands of individual travellers.

Bankers also point to the devaluation of the taka as a contributing factor. The dollar has steadily risen from Tk 85.80 in December 2021 to Tk 123 in recent months, raising the local currency equivalent of any foreign transaction.

Despite this, card usage has grown due to convenience and accessibility.

Banks have streamlined their forex card services, making it easier for customers to pay tuition fees, hospital bills, and shopping expenses abroad without the need for physical cash or lengthy approval processes.

The card-based foreign currency transactions started rebounding after July 2021 with relaxation of travel restrictions and the amount crossed Tk 250 crore in December 2021. In July 2022, it was Tk 441 crore.

The monthly average transaction volume through cards remains over Tk 600 crore for a year.

Foreign currency transactions using cards have experienced significant growth in the current financial year, as it has become much easier for travellers to obtain foreign currency through cards from banks, bankers said.

Transactions like shopping bills and utility payments can now be made with ease, and transferring money between banks takes just a click—reducing the need to carry cash and making daily life more convenient.​

 

[Saif]

Bangladesh to become half a trillion-dollar economy in FY27

The government expects the country’s economy to cross the $500 billion mark in the fiscal year (FY) 2026-27, buoyed by stabilising policies and sectoral improvements.

www.thedailystar.net

Bangladesh to become half a trillion-dollar economy in FY27
Govt also estimates gross national income to cross $500b in FY26

The government expects the country's economy to cross the $500 billion mark in the fiscal year (FY) 2026-27, buoyed by stabilising policies and sectoral improvements.

These projections were made by the Finance Division in its Medium-term Macroeconomic Policy Statement, released on June 2 alongside the national budget proposal for FY26.

The statement includes forecasts for gross national income (GNI), foreign exchange reserves, exports, imports and inflation through to FY28.

These projections were made using forecasting models developed by the International Monetary Fund (IMF) and the World Bank, adjusted with historical data.

Gross domestic product (GDP) measures the total market value of all goods and services produced within a country in one year, according to Investopedia.

GNI, by contrast, includes income earned by residents and businesses both at home and abroad.

According to the Finance Division, the nominal GDP of Bangladesh will reach $514 billion in FY27, up from a provisional estimate of $463 billion in FY25. In FY26, it is projected to stand at $487 billion.

GNI is expected to overtake the GDP earlier, with the government forecasting it to hit $512 billion in FY26, up from $486 billion in FY25.

However, some economists have questioned the reliability of the data used to make these predictions.

"The Bangladesh Bureau of Statistics is still relying on previous figures. It should carry out fresh surveys to reveal the real state of the economy," said Professor Mustafizur Rahman, a distinguished fellow at the local think tank Centre for Policy Dialogue (CPD).

He said that based on previous figures and accounts, GDP might exceed the half-trillion mark in FY27 if the government meets its growth targets of 4 percent in FY26 and 5.5 percent in FY27.

As for GNI, the economist added, "It is always higher than GDP in Bangladesh because our nationals earn more abroad than foreign nationals earn here."

The upbeat outlook by the government comes at a time when several international development partners, including the World Bank, IMF and Asian Development Bank, have offered more cautious estimates.

Citing political uncertainty, weak investment and geo-political tensions, they expect real GDP to grow between 3 and 4 percent in FY25.

In its provisional estimate for FY25, state-owned statistical agency BBS also projected GDP growth at 3.97 percent

Despite the current slowdown, the Finance Division expects a gradual recovery. It projects real GDP growth to reach between 5.5 and 6.5 percent by FY28, supported by efforts to bring down inflation, boost productivity and strengthen the external sector.

"The government's efforts to control inflation, enhance productivity, and maintain external resilience will be critical for ensuring macroeconomic stability," said the policy statement.

Following the Covid-19 pandemic, Bangladesh struggled to keep its exchange rate stable as foreign currency reserves depleted fast.

For FY25, the Finance Division revised the estimate for foreign exchange reserves to $26.7 billion, down from $31.8 billion in the original projection.

In FY24, actual forex reserves were at $26.9 billion.

The government expects reserves to rise to $34 billion in FY26, with a slight increase the following year.

Professor Rahman said the target could be met, but only under certain conditions.

"Gross reserves might cross $34 billion, but that depends on assumptions that import growth stays low at around 6 percent and export growth remains strong," he said.

But sluggish import growth could spell trouble, he said.

"If import growth stays this low, it does not bode well for GDP growth, investment or job creation. This trend is mainly due to falling imports of capital machinery.

"What we need is higher imports of capital machinery, not just a push to increase foreign currency reserves," he added.

The central bank currently uses two methods to measure foreign currency reserves. According to Bangladesh Bank data, gross reserves stood at $25.8 billion on May 29, while the BPM6 method by the IMF recorded it at $20.6 billion.

"We need to maintain reserves at a sustainable level," said Rahman. "But we must also remember that reserves will be used if investment rises and capital machinery imports go up."

"I would prefer strong investment, higher growth, stable reserves and a steady exchange rate rather than low investment, weak growth and artificially high reserves," he added.​