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04th-Jun-2018

Money laundering may accelerate ahead of election

By

Staff Reporter :
The national economy is losing macroeconomic cohesion said the Center for Policy Dialogue (CPD) at a presentation on Sunday. It also pointed at huge amount of money being laundered from the country cover of fake import business. 
It fears that money laundering may further grow ahead of election. The other malice is the big budget for mega projects the CPD economists pointed out saying the cost of 1 KM road building in Bangladesh is more that what it costs in New York. Cost of mega projects are also draining money several times more than real project value. 
The biggest worries are arising from the fact the external balance is rapidly deteriorating as imports bills are soaring over export earning and remittances. CPD figures shows that import cost increased by 24.4 percent over the ongoing fiscal 2017-18 as against a rise by 17.4 percent in remittance and 4.4 percent in export earnings.
Such mismatch is creating threats to macroeonomic stability, CPD said calling for remedial measures to stop fake invoicing and payment of import bills which are facilitating money laundering from the country.
CPD Distinguished Fellow Dr. Debapryia Bhattacharya highlighted the issue while making presentation on `State of the Bangladesh Economy' in FY 2017-18.
It was CPD's third reading as part of its `Independent Review of Bangladesh`s Development` presented at BRAC Centre Inn in the city.
The CPD concentrated its observation mainly on three sectors of the economy-finance and banking, capital market and external economy. The main concerns came out focusing on continued deteriorating performance of the banking sector and growing imbalance in the external trade and foreign debt.
CPD Distinguished Fellow Mustafizur Rahman said non-performing loan (NPL)
now stands at 9.5 percent in Bangladesh as against two to four percent in the East Asian countries. "The most concerning is that the bad loans are increasing rapidly and the NPL is highest in Asian region," he said.  
He said the frustrating issue is that Bangladesh is not taking any effective measures in reducing the NPL while India and other countries have been continuously taking effective measures. Debapryia Bhattacharya said banking sector in Bangladesh is like an orphan in the
hands of powerful people and it needs quick remedial measures. It suggested constituting a commission to bring reforms.
CPD criticized taking costly very costly foreign loans which may become huge burden at the end. It said many mega projects being implemented with foreign debt will put up pressure on foreign exchange.
Dr. Debapryia said the country`s revenue collection will experience a deficit of about Tk 50,000 crore in the current fiscal 2017-18. He said the main challenge of the government in the coming budget will be increasing the tax-GDP ratio.
Criticising the government`s move to lower the corporate tax, the CPD said no country could be able to attract more foreign investment alone by such measures. The entire businesses environment must be simplified to achieve the goals.
It said the government should take steps to realize the revenue now stuck up in the court case over disputes on taxes. There should be steps for outside court settlement system to resolve such disputes to release the stuck-fund, said the CPD.
The think tank body also express grave concern over the government`s increasing dependence on borrowing from saving instruments like NSD.
It said due to borrowing from NSD, the government will have to pay Tk 32,000 crore as interest in the current fiscal.
The CPD observed that the saving certificates are sometimes misused as many rich people buy it for higher profit. CPD Executive Director Dr. Fahmida Khatun and Director Research Dr. Golam Moazzem were also present at the function.