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Revenue Collection in FY23 Grows by 8% yet Misses Target by Tk 44,000cr

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Despite an 8.12% growth in revenue generation compared to the previous fiscal year, the National Board of Revenue (NBR) of Bangladesh fell short by Tk 44,000 crore in achieving its revenue target for the fiscal year 2022-23. However, there is a possibility of reducing the deficit as the final calculation of value-added tax (VAT) is yet to be completed. The deadline for VAT returns submission is July 15, and NBR officials anticipate a significant accumulation of funds during this period.

For the fiscal year 2022-23, the revenue collection target was set at Tk 3.70 lakh crore. According to the provisional account of the NBR, revenue amounting to Tk 3.25 lakh crore has been collected, resulting in a shortfall of approximately Tk 44,000 crore.

The import-export sector, including customs, contributed around Tk 91,717 crore, falling short of the target of Tk 1.11 lakh crore by about Tk 19,283 crore, with a growth rate of 2.56%.

Conversely, the VAT sector achieved the highest growth rate of 11.5%, collecting Tk 1.20 lakh crore against the target of Tk 1.37 lakh crore.

In the income tax sector, Tk 1.12 lakh crore was collected against a target of Tk 1.22 lakh crore, showing a growth rate of 9.62%.

In the previous fiscal year, FY22, the revenue deficit stood at Tk 28,000 crore, with a total revenue collection of Tk 3.852 lakh crore.

A senior NBR official stated that 87.91% of the revenue collection target was achieved across the three categories of NBR in FY23.

For the current fiscal year 2023-24, the revenue collection target has been set at Tk 4.30 lakh crore.

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Banks in Industrial Areas to Open June 14-16 for Eid Payments

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To ensure timely payment of salaries and bonuses to garment industry workers before Eid-ul-Azha, the branches of banks in key industrial areas will remain open on a limited basis on June 14, 15, and 16.

The Bangladesh Bank (BB) issued a notification stating that bank branches in Dhaka metropolitan, Ashulia, Tongi, Gazipur, Savar, Bhaluka, and Narayanganj will operate on these days to facilitate financial transactions for garment sector employees.

Typically, Friday and Saturday (June 14 and 15) are weekly holidays, and Sunday (June 16) will be closed for Eid. Despite these closures, the BB has mandated that banks in industrial regions stay open to manage the disbursement of wages and bonuses and facilitate the sale of export bills.

Additionally, bank branches in Chattogram metropolitan and industrial areas will also be open to support garment workers’ payments and the processing of export bills.

The BB has instructed banks to coordinate with local authorities to ensure adequate security at the branches during this period.

Eid-ul-Azha, one of the most significant religious festivals for Muslims, will be celebrated in Bangladesh on June 17.

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Cenbank Mandates Real-Time Reporting of Willful Defaulters

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The Bangladesh Bank (BB) has issued new instructions to banks to submit data on willful defaulters to the Credit Information Bureau (CIB) database. This directive was issued on Tuesday, requiring immediate compliance from commercial banks and non-banking financial institutions (NBFIs).

In a circular released by the CIB of the central bank, banks have been instructed to report their June data in real-time starting July 1. The circular has been sent to top executives of banks for prompt execution.

This move follows an earlier initiative by the BB, outlined in a circular on March 12, aimed at identifying willful defaulters within the banking sector. The central bank also detailed actions to be taken against such defaulters.

According to the circular, any client who takes a loan anonymously and misuses it will be classified as a willful defaulter. Banks were directed to establish a ‘willful defaulter identification unit’ by April 9 to facilitate this identification process.

The circular further stipulates penalties for non-compliance. Banks that violate these conditions will face fines ranging from Tk 50 lakhs to Tk 1 crore. Continued violations will incur additional fines of Tk 1 lakh per day.

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Cenbank Raises Dollar Price to Tk 117

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The Bangladesh Bank has adjusted the dollar price to Tk117 from Tk110 by introducing the crawling peg exchange rate mechanism.

Under this new approach, the bank will buy and sell dollars with Tk117 as the mid rate.

This decision was reached during a meeting of the monetary policy committee on Wednesday, May 8th.

Additionally, the committee has opted to discontinue the SMART lending rate mechanism, allowing banks to set their lending rates based on dollar demand and supply, according to a circular issued after the meeting.

The crawling peg system permits a currency with a fixed exchange rate to fluctuate within a specified band of rates, combining features of both fixed and floating exchange rate regimes.

On May 5th, Bangladesh Bank Governor Abdur Rouf Talukder announced the adoption of a market-based interest rate and the implementation of a crawling peg system to stabilize the foreign exchange rate.

He stated that the central bank is collaborating with prominent economists and bankers to devise a contractionary monetary policy aimed at curbing inflation and restoring macroeconomic stability.

Earlier, on April 2nd, the World Bank stressed the importance of a crawling peg mechanism aligned with market-clearing exchange rates to narrow the gap between formal and informal exchange rates, as outlined in the latest Bangladesh Development Update report.

Meanwhile, the International Monetary Fund (IMF) has advocated for a market-based dollar rate. In January 2023, the IMF attached several conditions to a $4.7 billion loan facility over a three-and-a-half-year period. Bangladesh has received two installments of the loan by fulfilling nearly all conditions, except for the reserve requirement.

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