When corruption hurts

Shamsul Huq Zahid observes Corruption is one of the most discussed issues in Bangladesh. Many tend to describe it as 'systemic' and some others 'pervasive'. In fact, the adjectives used do not make any major difference as the vice has been taking a heavy toll on the economy and causing enormous sufferings to the common people. With most governments remaining indifferent to the need for combating this social malaise, the people are by now almost certain that they have no option other than accepting it as 'fait accompli'. But the government of the day, apparently, is paying the cost of the indifference demonstrated, willfully or otherwise, to a problem of enormous magnitude--- the image crisis that the country has suffered repeatedly for being ranked as one of most corrupt nations on earth, is a pointer to that fact. The multilateral lenders have never concealed their displeasure at the governments, past and present, for not taking appropriate measures to combat corruption, which, according to an estimate, has been causing an economic loss equivalent to 2.0 to 3.0 per cent of the country's gross domestic product (GDP) annually. But this time the said lenders, particularly the World Bank (WB), appears to be dead serious to stick to what it had told the government repeatedly about the maintenance of transparency in the implementation of big projects with its funding. Not only the WB country office in Bangladesh but also officials from the Bank's headquarters in Washington during their interactions with the government leaders hammered on the issue of corruption-free implementation of mega projects such as the Padma Bridge. The latter had assured the WB officials in unequivocal terms that transparency would be ensured at any cost. But it has not taken too long a time for the WB to come up with allegation of corruption in the Padma Bridge bidding process. The government was caught off-guard when the WB only recently complained about irregularities in the short-listing of firms to be awarded with the consultancy job for the US $2.9 billion Bridge project. It has launched its own investigation into alleged irregularities by a Canadian firm to secure the consultancy job. The amount involved is not a big deal compared to the size of the project. But the WB, seemingly, is bent upon going deep into the matter. Side by side by its own investigation, the Bank has pointed its accusing fingers at the Ministry of Communications and requested the government to launch its own probe. The WB high-ups during a recent meeting with the Bangladesh Finance Minister, reportedly, has made it clear that the Bank would not make any disbursement from the fund---$1.2 billion---it has committed for the Bridge project until the completion of the probe into allegation of corruption. So, the prospect of completing the mega project within the tenure of the incumbent government is dimming fast. And if that happens, the ruling Awami League (AL) would be deprived of a potential political mileage in the next general elections. The successful implementation of the Padma Bridge, no doubt, would be a feather in the political cap of the AL. What is worse, the Bank has tagged the availability of $1.0 billion budgetary support to the Padma Bridge corruption issue. It has, reportedly, made it clear that the assured amount of budgetary support that the government badly needs now because of the gross mismatch between revenue receipts and expenditures would not be made available before the completion of the Padma Bridge corruption probe. The government has been trying to secure $1.0 billion from the International Monetary Fund (IMF) under the latter's extended credit facility (ECF), which also may not be available soon. Though the credit is not relevant to Padma Bridge corruption probe, the IMF being the twin of the WB might hold back the disbursement of the credit under one pretext or another. The government now desperately needs early disbursement of both budgetary support from the WB and the ECF credit from the IMF. With its more than anticipated budgetary expenditures on account of ballooning subsidies being extended to different sectors, particularly to power and energy, the government has been borrowing heavily from the country's banking system, thus, fueling further the inflationary pressure and creating distortion in monetary management. The government is also not comfortable with its balance of payments (BoP) situation because of its soaring import bills. With remittance growth remaining lackluster, the foreign exchange reserve is now hovering below the $10 billion mark. The amount is not enough considering the country's import needs and the higher values of commodities in the international market. So, corruption is not hurting the people alone. Rather, it has emerged as a serious threat to the sound economic management on the part of the government of the day in particular. Who knows this fact better than the incumbent finance minister? Zahidmar10@gmail.com