Revenue deficit and debt burden: What will the government do?

Money is the lifeblood of a person, and also of a society. Suppose you have no money. Then you cannot focus on anything properly. But if you have income, your morale stays high. Newspapers recently reported that in the first three months of this fiscal year, the government collected about Tk 42 thousand crore less than its revenue target. That is about 31 percent below the target.

Suppose the government’s spending target this year is Tk 100. Tk 71 will be collected from it, and the other Tk 29 must come from borrowing from different bodies or from the kindness of others. Now suppose another Tk 22, which we counted as collectable at the start, is not collected. At the same time, Tk 14 must be paid as interest on loans. So out of Tk 100, we assumed at the start that Tk 29 would not come. Then a new Tk 22 was not collected, and Tk 14 must go to interest. That leaves Tk 35 to spend.

With this Tk 35, how much development is possible after meeting the state’s direct costs, when even meeting those costs is hard? Newspapers report that next month the government will not have enough money to pay its officials. Then how will the state run? Many say the government is being forced to print money to handle the pressure. If that is true, where will the future of the country stand? Where will the fall in the value of the taka end?

How will the government handle this huge pressure? Is this big deficit due to the government’s neglect or decline? On the surface, neither is clear. But only right policy and skilled manpower can keep all citizens safe from these bad days. Right policy and effective steps alone can save the country from this hardship. So the government should avoid mega projects and take up only essential ones, and finish them with its own funds.

Bangladesh’s foreign debt stood at 78 billion US dollars as of March 2026. Finance Minister Mr. Amir Khasru Mahmud Chowdhury said this in Parliament on 24 June 2026. Domestic debt stood at more than Tk 22 lakh crore as of December 2025. So how much more? Many do not think it will do great harm if the country sees no development for a few more years, amid this global unrest and recession. Experts see no choice other than a contractionary development policy for the country’s interest and need.

Now let us look at why the government has such a huge shortfall in the first three months. The government usually earns from three sources: value added tax (VAT), income tax and import export duty. Income tax is slightly short of its target. Of the other two, the biggest shortfall is in VAT collection. In this period, half of the total revenue shortfall came from VAT. The other two depend on people’s buying power. The government earns VAT only when people shop. If there is no shopping, where will it get VAT? If there is no import and export, how will it get duty?

The shortfall in both proves that people have no money and cannot afford to buy. If you look closely, big shopping malls are empty of buyers. In some businesses, not a single customer comes even after waiting all day. So it is natural that the government falls behind its target. If trade and business do not move, why would imports and exports be needed? If there are no imports and exports, duty will fall. That is natural too. Unrest in the Middle East and the Gen Z movement in Europe have caused unrest across Europe. America is also feeling the touch of recession. So exports are not happening much either. In this state, duty collection will be low. So what way is there other than a contractionary policy?

Another major source of government income is the banking sector. That sector itself is on the edge of collapse. Newspapers report that about 22 banks are making losses. Islami Bank used to earn more than Tk 3 thousand crore in annual profit. Today the same bank is in loss. Suppose a bank makes Tk 3 thousand crore in profit. The government takes 37.5 percent of the profit directly, about Tk 1,125 crore, as revenue. But if the bank makes a loss, how will that reach the government’s revenue?

That is not all. The government also earns in many ways from every customer’s account, through excise duty and tax at source. Banks are facing a shortage of customers. If you look, the number of customers in banks is much lower. So here too the government is at a loss. There is no alternative to reshaping the banking sector to lift the economy. But the government seems indifferent here too. It keeps giving relief to big loan defaulters. Where the banking sector should be reshaped, no visible steps are seen. Giving such relief to defaulters at this critical time is rare in the world. Instead of giving them relief, the government’s only goal should be to bring back the money smuggled abroad.

Now let us review the government’s budget. This is not the budget season, but we can still review the budget related matters the government announced. The National Board of Revenue (NBR) will collect Tk 6 lakh 95 thousand crore, out of the Tk 9 lakh 38 thousand crore target of this 2026 27 national budget. Even so, a deficit of Tk 2 lakh 43 thousand crore will remain. The foreign loan target is Tk 1 lakh 55 thousand crore.

This budget requires Tk 1 lakh 27 thousand crore in interest payments on those loans. Last time it was Tk 1 lakh 22 thousand crore. To fill this huge deficit, the government takes domestic and foreign loans every year. The interest payment also grows every year. About 14 percent of this year’s original budget must go to interest. The remaining 86 percent will be spent for the country. But even within that 86 percent are loan installment payments. So how much is truly spent for the country is also something to consider.