Staff Correspondent:

Bangladesh’s budget deficit surged by 73.04 per cent in the first seven months of the current fiscal year compared to the same period in FY24, driven largely by sluggish tax collection, official data shows.

According to the Ministry of Finance (MoF), the total government expenditure stood at Tk 2.746 trillion during the July-January period of FY25, while revenues reached Tk 2.362 trillion, resulting in a deficit of Tk 384.93 billion.

During this period of FY24, the deficit was Tk 222.44 billion.

Of the total spending in this period of FY25, operating expenditure accounted for Tk 2.233 trillion, and development expenditure amounted to Tk 512.71 billion, the ministry data shows.

The tax revenue collected by the now defunct National Board of Revenue (NBR) was Tk 1.99 trillion during the period, equivalent to just over 40 per cent of the annual target.

The collection of non-tax revenue – mainly comprising different fees and fines as well as dividends from government entities – was better, reaching Tk 367.2 billion, nearly 80 per cent of the budgetary target.

A significant share of the NBR’s tax revenue came from indirect taxes, which usually pass on to the public through value-added tax (VAT).

Of the total revenue collection, 38.54 per cent came from VAT, 33.28 per cent from income tax, 14.24 per cent from supplementary duty, 11.32 per cent from import duty, and the rest from excise duty and other taxes.

On the expenditure side, interest payments for domestic borrowing emerged as the single largest item, consuming nearly 70 per cent of the total domestic interest payments, amounting to Tk 650.86 billion.

Foreign interest payments stood at Tk 108.16 billion, up nearly 53 per cent from the budgetary target.

The salaries of government officials consumed over 49 per cent of the budget target, standing at Tk 62.69 billion.

To finance the deficit, the government leaned heavily on domestic sources, primarily the banking sector, which provided Tk 233.62 billion.

External borrowing during the period totalled Tk 175.25 billion. For FY25, the government has announced a Tk 7.97 trillion budget.

The projected budget deficit, excluding grants, is estimated at 4.53 per cent of the gross domestic product (GDP).

Including grants, the deficit is expected to be slightly lower at 4.46 per cent of the GDP.