The current account deficit during the first five months of the current financial year (FY) reached a record level, in monetary terms, in the country's history. It was $726 million during the period under review, official statistics show.
Such a large deficit has made experts concerned because of the fact that the deficit might put pressure on the overall balance of payments (BoP) that has been fairly comfortable in the recent past.
Experts, however, are not that worried about the BoP, for some turnaround in export earning and remittance receipts would eliminate any risk factor as far as BoP situation is concerned.
What is worrying them most is the country's rising import bill when the cost of fuel oils and most other commodities have been on the lower side for quite some time in the international markets. Nearly 10 per cent hike in import costs as against 6.15 per cent increase in export revenue receipts is not a healthy sign for any country.
While tracing reasons for growth of import, experts have raised doubts about the import of substantial volume of capital goods in the first five months of the current FY and also in the past few years. They have pointed out in particular the absence of an obvious impact of a large volume of capital machinery import either on exports or local manufacturing industry. Under the circumstances, they suggested a thorough probe into capital machinery import, which, they fear, has become a safe conduit for transferring money abroad by an unscrupulous section of people.
If a large volume of capital goods, imported at a substantial cost, is really used for productive purposes, then there is no reason to be concerned about it. Rather the same would add to productivity, employment and, thus, make positive contribution to the economy.
Since the government is now engaged in the implementation of a good number of large infrastructure projects, including the Padma Bridge, the public sector import of capital goods has recorded a rise in recent months. But that hike does not substantiate the rate of overall growth of capital goods import.
So, the people concerned have strong suspicion that a substantial volume of ill-gotten money is being taken out of the country through so-called import of capital goods.
Such a suspicion, however, is very much in line with the findings of the Global Financial Integrity (GFI), a Washington-based organisation that tries meticulously to track the global flight of illicit funds.
In its latest report, the GFI estimated that nearly $10 billion had flown out of Bangladesh in the year 2013. That is not all. The flight of capital from Bangladesh, which is still on the list of least developed country (LDC), between 2004 and 2013, according to the GFI, had been worth $59 billion. The amount is nearly 30 per cent of the country's GDP (2015 estimate). How can a poor country like Bangladesh that is struggling hard to finance its major infrastructure projects afford this kind of drainage of funds?
The GFI has identified a number of means that are used to transfer illegal funds from one country to another. Trade invoicing is one such means that is used widely, particularly in the developing countries, in the case of capital flight.
In the age of information technology, transfer of illegal capital has become quite easy. But when the job is accomplished through trade transactions, banks and customs authorities can play a very important role to stop it. If the banks do their job diligently and ensure that the prices quoted in the letters of credit (LCs) are in line with international prices of commodities concerned, it would become difficult to transfer funds through over-invoicing. Similarly, it would be really hard to get away with the crime like illegal fund transfer, if customs see to that imported goods are in accordance with the specifications mentioned in the LCs.
However, in a country where graft is systemic, anything is possible. Transfer of illegal funds abroad should be an easy matter. What one does need to do is greasing the palms of the officials concerned if one is willing to use the official channels to do the mischief. There are illegal channels too. Though risky, those are also being used widely for illegal fund transfer. The flow of illegal fund will continue. But there should be efforts to reduce its present extent.
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