The Ministry of Finance has requested a budget of 400 million US dollars from the Chinese Asian Infrastructure Investment Bank (AIIB) due to concerns about a significant decrease in revenue stemming from the decline in the country's trade and commerce. This request aligns with the terms stipulated in the second and third tranches of the International Monetary Fund's (IMF) Extended Credit Facility (ECF) and Extended Fund Facility (EFF) loans, which mandate an additional revenue increase of 0.5 per cent of the Gross Domestic Product (GDP) for the current fiscal year.

According to sources familiar with the matter, AIIB Acting Vice Chairman Rajat Mishra met with Finance Minister Abul Hasan Mahmud Ali at the Secretariat on Tuesday morning. During the meeting, the Ministry sought budget support from AIIB.

Following the meeting, the finance minister responded to journalists' inquiries, stating that the Asian Infrastructure Investment Bank has expressed interest in providing loans for climate and infrastructure projects. He expressed satisfaction with this development, emphasising the close relationship between the two entities and AIIB's willingness to offer assistance.

When asked about potential areas for cooperation, the minister revealed that AIIB aims to contribute to the climate and infrastructure sectors. He noted their readiness to support initiatives identified by Bangladesh and mentioned ongoing policy discussions. The minister expressed enthusiasm for this collaboration, characterising it as a positive development.

Finance Secretary Khayeruzzaman Majumder added that AIIB has shown interest in expanding its involvement in the infrastructure sector, a proposition the Ministry supports. He mentioned requesting additional budget support programmes and highlighted AIIB's focus on global climate financing.

Sources within the finance department indicated that revenue collection may decline due to various factors, including political instability affecting business and trade. This situation jeopardises the country's ability to meet IMF loan conditions, which require a 0.5 per cent increase in revenue as a percentage of GDP. Additionally, achieving the targeted GDP growth rate appears unlikely. At the same time, revenue collection has fallen short of expectations due to challenges such as a crisis in remittances and export income and a shortage of dollars.

However, amidst an image crisis affecting foreign donors' confidence in providing loans and financial assistance, international financial institutions like AIIB are seen as crucial sources of budget support.

Economist Dr. A. B. Mirza Md. Azizul Islam emphasised on the importance of improving business and trade conditions to boost revenue collection. He advocated for leveraging loans from international financial institutions for development, citing their lower interest rates than traditional bank loans.

According to recent information from the National Board of Revenue (NBR), released four days ago, revenue collection deficits amounting to Tk 17,751 crore occurred during the first seven months (July-January) of the current fiscal year. During this period, the NBR had set a collection target of Tk 2 lakh 15 thousand 590 crores, but it managed to collect only Tk 1 lakh 97 thousand 839 crores, falling short of the target. However, despite the deficit in the first six months (July-December), the situation has improved slightly. During those six months, the shortfall in revenue collection was Tk 23 thousand 227 crores.

In the budget for the current financial year, the NBR was initially given a target of Tk 4 lakh 30 thousand crores. However, this target was recently revised to Tk 4 lakh 10 thousand crores.

The data from the NBR indicates that 51 per cent of the overall target has been collected in the first seven months of the year. This means that more than 2 lakh 11 thousand crore Taka need to be collected in the remaining five months of the year. In simpler terms, an average of 42 thousand 432 crore Taka should be collected monthly to meet the target.

The IMF is expected to disburse approximately $3.3 billion to Bangladesh under ECF and EFF loans, with an additional $1.4 billion under the Resilience and Sustainability Facility (RSF). Bangladesh has already received two instalments of this loan, and other international institutions, including the World Bank and the Asian Development Bank, are providing budget support for the current fiscal year.

Over the past three years, AIIB has provided $4.5 billion in budgetary and financial assistance to Bangladesh, including 400 million USD in budget support in the current financial year.