Illicit fund outflow from country keeps rising

Asjadul Kibria | Published: December 10, 2015 00:00:00 | Updated: December 10, 2015 00:09:27

Illicit financial flow (IFF) or outflow of dirty money from Bangladesh marked a phenomenal rise in recent years, as a global research organisation just revealed around 34 per cent increase to $9.66 billion in 2013 over the previous year.
The amount of money, thus illegally transferred from the country, stood at US$9.66 billion (Tk 750 billion) in 2013 in a rapid rise from US$7.22 billion (Tk 563 billion) in 2012.
That means fund equivalent to three-fourths of the current development budget has flown out from the country. The size of the Annual Development Programme (ADP) in fiscal 2015-16 (FY16) is Tk 970 billion. Â
The figure of IFF was disclosed in a report titled 'Illicit Financial Flows from Developing Countries: 2004-2013' which was prepared by Global Financial Integrity (GFI), a Washington-based organisation rigorously working on this issue. The organisation identified IIFs as illegal movements of money or capital from one country to another.
The report, released globally on Tuesday night, is an annual update on the estimation of IFFs globally.
It shows that during last 10 years (2004-2013), dirty or black money amounting to $55.87 billion flowed out from the country to different destinations--mostly to tax havens like Switzerland, Mauritius, British Virgin Island, Dubai and Singapore.
It also shows that in 2013, the highest amount of 'black money' had flown out of the country. Due to huge increase in illegal transfer of financial assets, Bangladesh ranked 26th in IFF during 2004-2013 period among 149 countries under watch of the organisation.
Illicit financial flows from developing and emerging economies surged to $1.1 trillion in total in 2013.
IFFs first surpassed $1.0 trillion in 2011, and grew to $1.1 trillion in 2013-marking a dramatic increase from 2003, when the amount was just $465.3 billion.
According to GFI, maximum amount of outflow of dirty money takes place through trade mis-invoicing and the rest through hot money as reflected in the leakages in the balance of payments (BoP).
In the 10 years under review, some $49.13 billion had been siphoned off Bangladesh through trade mis-invoicing.Â In 2013, the amount was $8.35 billion.
GFI measured the trade mis-invoicing figure using the International Monetary Fund's (IMF) Direction of Trade Statistics (DOTS) database in conjunction with the Fund's International Financial Statistics (IFS) database.
In the 10-year time, some $6.74 billion worth of illicit hot money had flown out from the country. In 2013, the amount was $1.31 billion.
In last year's (2014) report, GFI mentioned that IFF from Bangladesh amounted to $13.16 billion between 2003 and 2012. But this year's report revealed a big change in all the figures.Â For instance, in the 2014 report IFF from Bangladesh was shown at $1.78 billion in 2012 while updated report showed it at $ 7.22 billion.
About the upward revision, the agency said: "This report calculates trade mis-invoicing for 56 of 149 developing countries using the "bilateral advanced economy" method, nearly tripling the number of countries for which this more accurate calculation is made relative to GFI's previous reports.
"For all but two of the countries joining this group, trade misinvoicing figures have been revised upwards compared to GFI's Illicit Financial Flows from Developing Countries: 2003-2012 sometimes drastically."
When contacted through email, Christine Clough, Program Manager of GFI, said trade mis-invoicing estimates for Bangladesh, and a number of other countries, were revised upward in this report due to a refinement of the estimation methodology.
"In that 2014 report we calculated trade mis-invoicing estimates by comparing the reported trade of Bangladesh with the world as a whole," she said in the written reply.
"This report makes the bilateral calculation for more countries than in any of GFI's previous global reports. This has led to higher trade mis-invoicing estimates for those individual countries, and in turn, the developing world."
She added: "By being able to delve into more detail on Bangladesh's trade flows (by having access to bilateral data), we get a more accurate picture of the country's illicit outflows (and inflows)".
"Illicit outflows and inflows are related but separate; you cannot 'net' them, because the outflows are a serious issue on their own."
During these 10 years, the highest amount of IFF was from China ($1.39 trillion) followed by Russia ($1.05trillion), Mexico ($528.44b), India ($510.29b) and Malaysia ($418.54b). Again, in 2013, IFF from China stood at $258.64 billion, which is the highest amount for a single country.
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