Bangladesh's government revenue collection stood at roughly 8 per cent of GDP in 2024, placing the country among the weakest fiscal performers globally and only marginally ahead of conflict-affected economies such as Yemen and Sudan, according to a report citing International Monetary Fund (IMF) data. The finding, published in The Daily Star, identifies Bangladesh as the lowest-ranked Asian economy on this metric and flags deep structural constraints in its public finance system.

Where Bangladesh Stands Regionally

The gap between Bangladesh and its South Asian neighbours is stark. Pakistan records a revenue-to-GDP ratio of 12 per cent, while Sri Lanka stands at 13.68 per cent. Bhutan leads the sub-regional comparison at 26.97 per cent, underscoring how far behind Dhaka lags even within its immediate neighbourhood.

Globally, a tax-to-GDP ratio of around 15 per cent is widely regarded as the minimum threshold for sustaining adequate public expenditure and macroeconomic stability. More than 70 developing economies remain below this benchmark, but Bangladesh's position near the very bottom of that group sets it apart. By contrast, advanced economies such as Austria, Denmark, Finland, and Norway collect upwards of 50 per cent of GDP in government revenue.

Root Causes of Weak Revenue Mobilisation

The report attributes Bangladesh's fiscal underperformance to a cluster of structural problems. A narrow tax base, the dominance of the informal sector, extensive tax exemptions and holidays, weak enforcement, and an over-reliance on indirect taxation are cited as primary drivers.

Notably, a deficit of public trust compounds the problem. According to the report, perceived corruption in state institutions has eroded tax compliance, with citizens reportedly unwilling to meet their obligations without visible improvements in the quality of public services — creating a self-reinforcing cycle of low revenue and low service delivery.

Impact on Public Services and Human Capital

The constrained fiscal space has had tangible consequences. Investment in health and education has remained limited over the years, and the report concludes that Bangladesh continues to underperform in human capital development as a direct result of chronic underinvestment in these sectors. This positions the country poorly for the kind of productivity-led growth that could eventually expand its tax base organically.

Reform Priorities Identified

Expanding the formal tax net is identified as the most urgent reform. Large segments of economic activity — including rural markets and peri-urban business hubs — remain entirely outside the tax system. The report also calls for strengthening direct taxation, improving land valuation reporting, and scaling up digital tax infrastructure to curb evasion and boost administrative efficiency.

With the IMF increasingly linking programme support to fiscal consolidation benchmarks, the pressure on Dhaka to widen its revenue base is set to intensify in the near term.