Bangladesh’s exposure to illicit financial flow is very high

The distinguished fellow of Center for Policy Dialogue (CPD) Debapriya Bhattacharya on Wednesday said Bangladesh has to play a leading role in international negotiations for sustainable development, reports UNB.

“Bangladesh is expected to graduate from LDC category in 2024. Foreign low-cost financing should be continued for the environment and social sectors,” he said.

He was speaking at a media briefing on the launching of UNCTAD's LDCs Report 2019 titled ‘The Least Developed Countries Report 2019: The Present and Future of External Development Finance - Old Dependence, New Challenges’ at ERF auditorium in the city.

Debapriya said Bangladesh never failed to repay foreign loans. The country utilised foreign donations and loans in previous years.

“We’ve to ensure that we’re able to pay back loans in future too,” he added.

Revealing the UNCTAD’s report of the Bangladesh chapter at the programme, CPD’s senior research fellow Towfiqul Islam Khan said Bangladesh’s tax-GDP ratio is significantly lower than the LDC average.

“The money laundered in 2015 was 36 per cent of our total tax collected during that period, according to the report,” he said, noting that tax buoyancy and tax efforts are also very low compared to other LDC countries.

Khan suggested increasing tax collection for reducing money laundering, noting that Bangladesh’s exposure to illicit financial flow is very high.

UNCTAD’s report said that LDCs should proactively ensure external finance from all sources is directed to national development priorities. “This approach is the best way to manage their aid dependency and eventually escape it,” the report said.

Khan said Bangladesh is among the seven LDCs having relatively lower tax efforts with a score of 0.68, ranking 27th among 29 LDCs.

Strengthening the state capacity to drive structural transformation and sustainable development are important to effectively mobilise and manage domestic resources, he said.

Actions by the international community in support of LDCs will be a must to deliver the SDG commitments, he added.

The senior researcher said resource gap (defined as the difference between domestic savings and gross fixed capital formation) in Bangladesh in 2015-2017 was lower than the LDC average 8 per cent of GDP.

“For nearly half of LDCs, the resource gap remained above 15 percentage points of GDP, which is particularly high for small economics and island LDCs. The gap of Bangladesh was lower than LDC average,” he said.

The report noted that top three recipients accounted for nearly 30 per cent of all additional private finance and the top 10 countries, almost 70 per cent.

“In 2012-2017, among LDCs, the beneficiary country with greatest amount received was Angola at $1.084 billion, followed by Senegal, at $0.895 billion, followed by Myanmar at $0.872 billion, followed by Bangladesh at $0.794 billion,” the report said.

CPD executive director Fahmida Khatun and research director Khondaker Golam Moazzem also were present there.