Bangladesh Bank has published a report on USD23 billion of export earnings disappearing in a matter of 20 months of two financial years. This large discrepancy came to light in the new export records of that time provided by the National Board of Revenue (NBR) and the Export Promotion Bureau (EPB). This glaring difference in export records has disrupted the balance of payments in current and financial accounts.
Due to the difference in export records and the disruption in the balance of payments in current and financial accounts, questions are now arising over the credibility of various records in the financial sector. There are also speculations about the contribution of export sector which has been bolstered over the years with tax cuts and incentives. There is also no denying that the exporters are earning dollars and generating employment.
Over the past two years exporters have been saying that exports have dropped. Banks have also been saying that export orders have decreased. Yet the government's Export Promotion Bureau has been maintaining a steady narrative of continuously growing exports and has also been publishing figures to that end. Based on that, the government's ministers have also been handing out dreams of earning USD100 billion in exports. And the central bank too has been basing its financial calculations on these figures. And yet Bangladesh Bank was aware that the exports in actuality were not as much as being projected. After all, every year export earnings coming in were less by USD 4billion to USD5 billion. This trend grew more and more.
In 2020 when the dollar crisis began, deficit in net trade credit took on serious proportions. As a result the financial account fell into deficit after a long time. The actual trade credit in financial accounts means the sum of the difference between export (shipment) and export earnings and the difference between import (shipment) and import expenditure. This woke the central bank up. A series of meeting were held between the three institutions and then calculations began afresh.
Had the central bank taken the present initiative back when every year there was a deficit of USD 4 billion to USD 5 billion in export and export revenue repatriation, then the gap wouldn't have been so large. Then perhaps Bangladesh would not have had to bear the liability of the financial account deficit for the last two years. Actually Bangladesh bank didn't want to open the Pandora's Box, in fear of what else would pop out.
The problem will not be resolved by simply unearthing the USD23 billion shortfall in export earnings in these 20 months. As the days pass, the entire picture will be revealed. Worse things will be revealed. The dollar crisis is not being overcome. The rate of the dollar and the price of commodities are on a steady rise, exacerbating people's hardship.
The main reason behind the dollar crisis is the gaping difference between the price of export goods and the repatriation of export earnings. It is true that the exporters have spent dollars to procure raw materials, but after exporting the manufactured goods they are not bringing back the revenue in that proportion.
Certain bank owners and defaults are extremely influential and powerful. That is why no one bothers them. They have total disregard for the rules and regulations. But the central bank should be looking into this as it is responsible for the security of the depositors' funds.
A business group owned by an influential person had kept his USD1 billion in export earnings held up in Dubai and some countries in Europe. No one is taking any action about this. Even Bangladesh Financial Intelligence Unit (BFIU) which is ostensibly in charge of coordinating prevention of money laundering, displays extreme nonchalance in this regard.
If one digs deep, it will be found that not only are there discrepancies in export records, but even in the case of import expenditure, the volume of goods have not entered the country as projected. The bank sector is in a pitiful state. The actual amount of default loans is many multiple times more than projected. As a result, the records of the banks' capital, security deposits and everything are topsy-turvy. Certain Shariah-based banks often provide the central bank with 30 to 40 thousand crore taka in loans without collateral in order to cover up their actual state of affairs. Also, the central bank is proving dollars from its reserves, but is not getting that back, and not doing anything about it either.
At least we can hope that the financial sector runs on real facts and figures, that the security of the depositors' money is ensured and that people's sufferings are assuaged. Those who are running the state surely will not disagree
Certain bank owners and defaults are extremely influential and powerful. That is why no one bothers them. They have total disregard for the rules and regulations. But the central bank should be looking into this as it is responsible for the security of the depositors' funds. This regulatory agency has taken the reserve direction. It has now come out into the open that certain banks and financial institutions have not paid their dues dimply due to the lack of supervision.
The question is, amid their own massive weaknesses, what message is the central bank trying to convey by opening the Pandora's Box to reveal the discrepancies in the export earning accounts. Does this regulatory agency have any way to evade responsibility? After all, the bank is closely connected to import and exports. So everyone must bear the liability of discrepancies in the accounts.
In developed countries, discrepancy in financial accounts is a serious offence. Punitive measures are taken in this connection. We cannot hope for any such consequences in Bangladesh. However, at least we can hope that the financial sector runs on real facts and figures, that the security of the depositors' money is ensured and that people's sufferings are assuaged. Those who are running the state surely will not disagree.
* Shanaullah Sakib is a senior correspondent, Prothom Alo shanaullah.sakib@prothomalo.com
* This analysis appeared in the print and online edition of Prothom Alo and has been rewritten for the English edition by Ayesha Kabir