The government’s revenue target for the current fiscal year is increasingly looking unattainable, with an extraordinary 84.6 percent growth in collections needed in the final three months of FY2025-26, the Centre for Policy Dialogue (CPD) said.
The government has set an ambitious annual revenue growth target of 29.3 percent. But given the staggering rise in collections required during the remaining April-June period, the CPD described the prospect as “highly unlikely”, the think tank said in its latest assessment of the economy released on Thursday.
It said revenue mobilisation grew by 6.9 percent during the July-March period of FY2025-26, down from 7.9 percent during the same period a year earlier.
The weak revenue performance comes amid mounting pressures on public finances, sluggish development spending, weak private investment and continued inflationary stress, according to the report.
Presenting the report, CPD Executive Director Fahmida Khatun mentioned “multidimensional pressures” across the economy, financial sector, productive sectors and social sectors.
She said these challenges were not isolated incidents but were being intensified by both domestic and global economic and political developments, alongside institutional weaknesses, poor implementation of laws and regulations, reform deficits and a lack of accountability.
The CPD noted that while the National Board of Revenue (NBR) tax collection grew by 10.6 percent during July-April, the pace remains far below what is needed to achieve the annual growth target of 34.5 percent.
The think tank said tax collection would need to grow by 128.6 percent during May-June to meet the fiscal year's target.
The report warned that the revenue shortfall is narrowing the government's fiscal space and increasing reliance on bank borrowing.
By March, net government borrowing from the banking system had already reached 98.5 percent of the annual borrowing target, compared with 62 percent during the same period of the previous fiscal year.
The CPD cautioned that such heavy dependence on bank financing could crowd out private-sector investment.
Development spending also remained sluggish.
According to the CPD, the ADP implementation reached only 35.4 percent during July-April, well below long-term trends although it was slightly higher than the 32.8 percent recorded during the corresponding period of FY2025.
Beyond public finance, CPD highlighted persistent weaknesses across the economy.
Inflation stood at 9.04 percent in April, while wage growth was lower at 8.16 percent, continuing to erode household purchasing power.
Rising fuel and LPG prices were identified as major contributors to higher living costs, particularly for low-income households.
The think tank also raised concerns about the banking sector and added that private-sector credit growth fell to a record low 4.72 percent in March, reflecting subdued investment activity.