Bangladesh Has to Rectify Financial Sector

 

Trade deficit in Bangladesh has crossed 36 billion dollars which is highest in the country’s history. At the same time Bangladesh government has borrowed nearly 99 billion dollars from internal sources. Moreover, the government has so far borrowed around 48 billion dollars from external sources. More money has been borrowed from the International Monetary Fund (IMF). Financial experts have stated that Bangladesh’s economy may be paralyzed if the country fails to pay back the above loans and if trade deficit cannot be mitigated immediately.

The price of one US dollar reached 120 taka in January 2024 though it slightly came down later on. Money laundering is one of the major reasons behind burgeoning trade deficit in Bangladesh. Money laundering from Bangladesh to foreign countries has increased on an unnaturally egregious scale, financial sources have informed. Reportedly 4 lakh 36 thousand crore taka have been illegally transferred from Bangladesh to overseas locations during last several years. On an average every year nearly 73 thousand crore taka is being laundered from Bangladesh to foreign destinations.

Financial experts have said that the list of the top money launderers of Bangladesh and the amounts they transferred abroad illegally should be unveiled. At the same time required steps should be taken by Bangladesh government without delay to retrieve the laundered funds from overseas, economists have commented.

Bangladesh’s banking sector is inflicted with over 2 trillion taka defaulted loans including written off debts, sources have reported. Economists have remarked that most of the defaulted loans might have been laundered to overseas locations. Bangladesh Bank has not yet exposed a list of top loan borrowers as a result of which the real scenario of defaulted loans is still vague.

Remittance from Saudi Arabia has dropped by 21% in recent months. Remittance from UAE has declined by 41%. Remittance from United Kingdom has decreased by more than 15%. Remittance from Qatar has gone down by around 10%. Remittance from Malaysia has nosedived by nearly 55%. World Bank, International Monetary Fund (IMF) and United Nations Conference on Trade and Development (UNCTAD) have predicted that Bangladesh’s inflation may further worsen if effective economic measures are not implemented immediately.

Financial scholars have blamed extreme lack of good governance and accountability in the country’s financial and banking sectors for the extensively rising figures of unlawfully transferred money from Bangladesh to foreign countries.

Financial experts have referred to political influence and inefficiency of Finance Ministry and Bangladesh Bank as principal causes behind money laundering. In recent times it has been revealed by relevant sources that a powerful group of money launderers are making false shipment papers and fake invoices to facilitate illegal money transfer from Bangladesh to overseas destinations. Under-invoicing and over-invoicing are another two ways utilized by financial culprits for transferring money to foreign countries through unauthorized conduits. United Nations Conference on Trade and Development (UNCTAD) published a similar report in 2019.

Financial sources have said that Bangladesh became a member of Egmont Group headquartered in Canada in 2013 to exchange information about money laundering and terror finance. Egmont Group has 147 member countries. Bangladesh can seek cooperation from Egmont Group for bringing back laundered money.

Reportedly some people send money to Bangladesh from countries like Singapore, Malaysia, UAE, Qatar and some other countries through mobile financial services. Bangladesh Bank withdrew an order issued to Janata Bank Limited recently regarding an LC (letter of credit) but no clarification was accorded for what reason it was done.


Mahbubul Islam is a lawyer
and former Secretary of
World Peace Council.