Embezzled money and economic crunch

That the misappropriation of money from banks for siphoning off abroad, presented as its findings by the Centre for Policy Dialogue (CPD), is an open secret. What makes the CPD report on the subject special is its painstaking collection of the 24 major media reports on financial-sector scams involving the parties responsible and the huge amounts they received illicitly. Thus bad and non-performing loans swelled to Tk1.56 trillion in the fiscal year (FY) 2023 from Tk427.25 billion in FY2012. In this context, undue rescheduling, written-off loans and those remaining unpublished for litigation in court might inflate the figure further. However, the amount of money embezzled from the banking system the CPD could ascertain stood at Tk922.61 billion in the past 15 years.
Now the CPD observes quite rightly what this amount of money could do for the country. The embezzled amount is nearly 12.1 per cent of Bangladesh's latest national budget and 1.8 per cent of the gross domestic product (GDP). It would be enough, the CPD finds, for filling the budget deficit. This further highlights how misgovernance of the financial sector has not only allowed powerful and influential borrowers to swindle money from banks but also compelled the country to look for loans from multilateral financial or development banks. The government had no option other than looking for $4.7 billion loan from the International Monetary Fund (IMF) in order to tide over the liquidity crisis and plummeting foreign exchange reserve. This is like turning a blind eye to smuggling of sackful of money out of the country while begging for a few hundred taka in cash. As the archaic policy of revenue earning also favours the rich, the total revenue garnered by the National Board of Revenue (NBR) is spent on current expenditure of the government. The CPD has shed light on this issue to show how the government has to borrow money for development works.
This leads to the more complicated affair of borrowing for payment of outstanding loans. That, the CPD calls, is the debt trap Bangladesh is heading for. Crafty business conglomerates and individuals have successfully drained the country out of its economic blood to the extent where the country is confronting an uncertain economic future. It is a clear case of crony capitalism, the CPD rightly observes. While debt servicing has been turning a headache for the government, some oligarchs have been reaping undue economic gains, a good number of them being responsible for capital flight from the country. On the other hand, the poor and low-income groups struggling for survival in the face of soaring inflation when the global commodity market has eased off following the immediate volatility caused by the Ukraine war.
If the economic growth gets stunted because of scarcity of greenback, the balance of payments will also encounter an adversarial regime. The two sources of foreign exchange income hardly give any encouraging message. Now, is there any light at the end of the tunnel? The first task is to reduce non-performing loans (NPLs). Then the NBR needs to review its easy option of indirect tax or the system of VAT and introduce a system of wealth or resource tax. Last but not least, international cooperation should be sought for return of the laundered money as much as possible.