'No more onion import from India'

[UKBengali]

Lower economic base is a factor so is lack of foreign borrowing for infrastructure in earlier times. Lack of foreign borrowing is also related to weak revenue collection, as foreign lenders are not very fond of lending money to the govt. whose tax collection is low and struggle ends meet. These things are inter related. Another factor is, then China was not a big lender.

Foreign borrowing for infrastructure development is not sustainable unless our revenue collection ramp up in the coming years. Otherwise we will be in a serious trouble.

Gdp per capita affects how much revenue a government has even if tax collection is low.
China still accounts for less than 10% of BD infrastructure spending even now and so is not a major factor. BD government, JICA, ADB are each larger sources of BD infrastructure spending at this time.


As for whether tax base needs to improve to keep borrowing at the rate that BD plans, well not really.
Currently total BD government revenue is 12% of GDP and so there will be far more "free" money that BD government can devote to debt repayments as the economy grows. Of course as BD gets richer and more people enter the formal economy then tax revenue as proportion of GDP will increase due to more people being in the tax net and also better collection methods with digitisation etc..

There is absolutely nothing to worry about as far as BD ability to service debt is concerned.

 

[Protest_again]

Gdp per capita affects how much revenue a government has even if tax collection is low.
China still accounts for less than 10% of BD infrastructure spending even now and so is not a major factor. BD government, JICA, ADB are each larger sources of BD infrastructure spending at this time.


As for whether tax base needs to improve to keep borrowing at the rate that BD plans, well not really.
Currently total BD government revenue is 12% of GDP and so there will be far more "free" money that BD government can devote to debt repayments as the economy grows. Of course as BD gets richer and more people enter the formal economy then tax revenue as proportion of GDP will increase due to more people being in the tax net and also better collection methods with digitisation etc..

There is absolutely nothing to worry about as far as BD ability to service debt is concerned.

That is not what your credit rating suggests. If your serviceability was great, your credit rating would have been much higher and it would have easier to get outside loan at much lower rates. Your credit rating is still worse than India. Moody, Fitch, S&P know your ability to service much better than you do.

You didn't get what @Homo Sapiens was saying. Your revenue collection determines how much external loan you can raise. And your revenue collection is 9.2% of GDP not 12%.

At 9.2 percent, Bangladesh’s tax-to-GDP ratio last fiscal year was one of the lowest in the world and well below peers in the region. Five years earlier, it was 9.9 percent.

The ratio is likely to shrink further this fiscal year if the collection trend of the first four months and the upward slant of GDP growth are considered. Collections grew just 4.83 percent, down from 6.74 percent registered a year earlier

 

[UKBengali]

That is not what your credit rating suggests. If your serviceability was great, your credit rating would have been much higher and it would have easier to get outside loan at much lower rates. Your credit rating is still worse than India. Moody, Fitch, S&P know your ability to service much better than you do.

You didn't get what @Homo Sapiens was saying. Your revenue collection determines how much external loan you can raise. And your revenue collection is 9.2% of GDP not 12%.

No as he is not correct.

Why do you not understand that revenue collection and tax collection are not the same thing? Tax collection is 9.2% of GDP but revenue collection is 12% of GDP as per post from @Homo Sapiens with BD government figures.

Two examples of things where BD government earns money that are not tax revenues are custom duties and profits from state owned enterprises.

I admit that BD credit rating is worse than India but my point is that current borrowing plans are sustainable up to 2030 even if revenue collection stays at 12% of GDP up to 2030.

BD GDP growth is predicted to be 7.3% average up to 2034 and so there will be enough growth in BD revenue, at 12% of GDP revenue collection, to service all these loans without diverting any money from other areas like education, health, defence etc.

The only thing that would cause BD to get into trouble is if GDP growth drops to something like 5% or below.

 

[Protest_again]

No as he is not correct.

Why do you not understand that revenue collection and tax collection are not the same thing? Tax collection is 9.2% of GDP but revenue collection is 12% of GDP as per post from @Homo Sapiens with BD government figures.

Two examples of things where BD government earns money that are not tax revenues are custom duties and profits from state owned enterprises.

I admit that BD credit rating is worse than India but my point is that current borrowing plans are sustainable up to 2030 even if revenue collection stays at 12% of GDP up to 2030.

BD GDP growth is predicted to be 7.3% average up to 2034 and so there will be enough growth in BD revenue, at 12% of GDP revenue collection, to service all these loans without diverting any money from other areas like education, health, defence etc.

The only thing that would cause BD to get into trouble is if GDP growth drops to something like 5% or below.

Oh my god, revenue growth is shrinking even as GDP growth is higher. That means even if I agree that revenue collection is at 12%, that ratio is shrinking by the year which is not a good sign.

I can't explain it to someone who is blinded by 'Sonar Bangla' myopia.

 

[UKBengali]

Oh my god, revenue growth is shrinking even as GDP growth is higher. That means even if I agree that revenue collection is at 12%, that ratio is shrinking by the year which is not a good sign.

I can't explain it to someone who is blinded by 'Sonar Bangla' myopia.

If you want to argue with some BD government figures then what is the point of talking with you?
You want to disagree with one figure and agree with the other as it suits your narrative it seems.

Do not worry about shrinking of revenue growth as that has happened before and we are still far away from the end of this fiscal.

Like I say as long as GDP growth stays at expected levels this debt is nothing to worry about. Fun fact: Last fiscal BD government spent just 4.3% of BD revenue on external debt repayment.
Yes this will increase in years to come but remember that the biggest chunk of loan that BD took and at commercial rates was the 12 billion US dollars for Roopur is not due it's first repayment till 2027.
All the rest of the loans are either soft(China) or very soft(JICA/ADB etc).

 

[Protest_again]

If you want to argue with some BD government figures then what is the point of talking with you?
You want to disagree with one figure and agree with the other as it suits your narrative it seems.

Do not worry about shrinking of revenue growth as that has happened before and we are still far away from the end of this fiscal.

Like I say as long as GDP growth stays at expected levels this debt is nothing to worry about. Fun fact: Last fiscal BD government spent just 4.3% of BD revenue on external debt repayment.
Yes this will increase in years to come but remember that the biggest chunk of loan that BD took and at commercial rates was the 12 billion US dollars for Roopur is not due it's first repayment till 2027.
All the rest of the loans are either soft(China) or very soft(JICA/ADB etc).

So tell me why is the credit rating low?

 

[UKBengali]

So tell me why is the credit rating low?

3 reasons:

1. BD is LDC currently and LDCs do not usually have good credit rating for obvious reasons. It will graduate out this decade and so this will increase it's credit rating

2. Per capita has been low in the past compared to India and this is being rectified - BD per capita in nominal terms will surpass India sometime early this decade.

3. Revenue collection has been always low.

The first two reasons are being rectified and the 3rd we need to wait and see.

 

[bluesky]

Lower economic base is a factor so is lack of foreign borrowing for infrastructure in earlier times. Lack of foreign borrowing is also related to weak revenue collection, as foreign lenders are not very fond of lending money to the govt. whose tax collection is low and struggle ends meet. These things are inter related. Another factor is, then China was not a big lender.

Foreign borrowing for infrastructure development is not sustainable unless our revenue collection ramp up in the coming years. Otherwise we will be in a serious trouble.

Bold part: Revenue collection base may not spread and rise unless thousands of industries are set up. Corporate taxes are usually deferred for a few years, but the collection of personal income taxes starts almost immediately when people start getting salaries in the industries or otherwise.

People will not be encouraged to set up industries if the rates of taxation are not progressive.

 

[Protest_again]

3 reasons:

1. BD is LDC currently and LDCs do not usually have good credit rating for obvious reasons. It will graduate out this decade and so this will increase it's credit rating

2. Per capita has been low in the past compared to India and this is being rectified - BD per capita in nominal terms will surpass India sometime early this decade.

3. Revenue collection has been always low.

The first two reasons are being rectified and the 3rd we need to wait and see.

First 2 are not reasons related to credit rating. Only 3rd is the actual reason for low credit rating. It is so because with such low revenue its hard to service loans no matter how big the economy is. You always argue with future tense. We want you to answer in the present tense.

Why do you think revenue collection is so low? Its because you don't have industries. All you have is textile workshops where people make meager amounts, doesn't come under tax bracket.

 

[UKBengali]

First 2 are not reasons but facts. Only 3rd is the actual reason for low credit rating. And it is not seen as improving. You always argue with future tense. We want you to answer in the present tense.

Edit - you have totally changed your post and so let me rewrite this.

Let us take LDC out of the equation.

OK let us look at per capita and debt to gdp ratio.

All people care about is if you can pay back and having higher per capita means that you will have more money to service your debts. Even if tax revenue as share of GDP stays the same, you will get a better credit rating just because with more per capita you have more revenue available to pay back loans. It is not that hard to understand this fact.

Also having a low debt ratio(as BD has) helps as you are not spending too much of your revenue to pay back current loans - this is the same with personal credit.

As for low tax revenue that is due to lack of industry which is being remedied right now both with domestic companies and FDI. Last fiscal FDI hit no less than 4.5 billion US dollars - as an example of this FDI China is spending 2.5 billion US dollars making an integrated steel mill in BD that would employ thousands of taxpayers.
IT industry is rocketing upwards employing thousands in well-paid jobs where people are paying taxes - average incomes of 40,000 formal IT freelancers was 8,000 US dollars last year.

 

[Protest_again]

BD has ALREADY met criteria for graduating out of LDC and it is just a formality to graduate out early this decade.
BD per capita is ALREADY 90% of India from 50-60% 10 years ago and growing quicker RIGHT NOW.

ALREADY is present tense last time I checked.

Total BD debt is only 28% of GDP compared to 70% of India. Only advantage that India has over BD is higher revenue collection but overall I expect BD and India to end up with similar credit rating by middle of this decade.

Thats future tense right there.

 

[Rank]

A very good move. We must end our dependency on India in every area if we don't want to be screwed up in future.

Then first remove HW ... she is an Indian puppet over ur heads..

 

[UKBengali]

Thats future tense right there.

Ready my edited post as you totally changed your post that I replied to!

 

[Protest_again]

Ready my edited post as you totally changed your post that I replied to!

Per capita income has got nothing to do with government borrowing. Borrowing is corelated to revenue. I am gonna take a rest. Joy sonar bangla. Okay.

 

[UKBengali]

Per capita income has got nothing to do with government borrowing. Borrowing is corelated to revenue. I am gonna take a rest. Joy sonar bangla. Okay.

High per capita means high revenue even at same ratio of revenue to GDP.