Economists warn that Bangladesh may fail to meet the International Monetary Fund (IMF) lending condition regarding domestic revenue mobilization due to a long neglect of fundamental tax reforms. The tax-GDP ratio has declined to 7.4% in the fiscal year 2023 from 7.9% last year, highlighting the need for reforms that should have been implemented 15 to 20 years ago. Without fundamental reforms in revenue administration, including the separation of the tax-policy wing from enforcement, increasing the country’s tax-GDP ratio seems unlikely. The IMF has set conditions for increasing the tax-GDP ratio by 0.5% in each of the next three fiscal years. The government aims for a 16% rise in revenue for the FY24 budget, but economists project that a 36.3% revenue growth is needed to meet the IMF target.
Struggles to Meet IMF Conditions as Tax-GDP Ratio Declines
Economic Tag: Vat & Tax
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