Bangladesh lost $800 million a year on average in capital flight owing to leakage in the balance of payments and trade mis-invoicing by businesses.
Over the last four decades, the total capital flight from Bangladesh accounts for 30.4 percent of its GDP of over $100 billion in 2010. The findings were disclosed in a study report released by the United Nations Development Programme.
The UNDP looked into illicit financial flows from eight low income and Least Developed Countries (LDCs): Bangladesh, Bolivia, Côte d’Ivoire, Guinea, Nepal, Sierra Leone, Tanzania and Zambia.
Meanwhile reports said wealthy people from Bangladesh have trashed huge amount of fund in Swiss Banks and these are outright swindling of public money by people using business cover operating under the cover of political shelter.
Leakages in the balance of payments account for 83.1 percent of the capital that went out of Bangladesh over the four decades; UNDP data shows.
Such leakage occurs when there is a mismatch between inflow and outflow of foreign currency. The authorities then put the lost money under the heading of “Error and Omission” in the country’s balance of payments account.
The amount of such losses was $977 million in fiscal 2011-12, $764 million in 2012-13 and $676 million in the first six months of 2013-14, according to the government’s Economic Review 2014.
Trade misinvoicing, which includes mispricing in imports and exports, accounts for the rest 16.9 percent of the capital flight, says the UNDP.
By 2008, the LDCs were losing between $20 billion and $28 billion annually due to illicit financial flows. This sum is roughly equivalent to the amount of Official Development Assistance that flows into these economies annually.
The study blames leakages in balance of payments, export and import mis-invoicing and unreported remittances for the capital flight.
According to the World Bank, capital flight is the unrecorded movement of funds between a country and the rest of the world.
This money is intended to disappear from any record in the country of origin, and earnings on the stock of flight capital abroad don’t normally return to the country of origin. The term, “illicit financial flows”, is commonly used to describe this form of capital flight.
The actual amount of money going out of the country might be higher as updated figures are not available.
The issue came to the fore on Thursday after Switzerland’s central bank disclosed that Bangladeshi citizens’ deposits with different Swiss banks rose by 62 percent year-on-year in 2013.
The deposits, which stood at Tk 3,236 crore (372 million Swiss franc) at the end of 2013, were Tk 1,991 crore in 2012, show the latest data of the Swiss National Bank.
Officials say Bangladesh Bank, the National Board of Revenue (NBR) and the Anti-Corruption Commission (ACC) are working on a mechanism to stop capital flight.
They would soon hold a joint meeting, said an official on condition of anonymity.
An ACC senior official said it would be tough to bring back the “lost money”. “We will take steps to stop any further capital flight.”
BB official said the central bank would take measures to prevent under and over-invoicing. As part of the initiatives, the BB will check its data on letters of credit with the customs data at the NBR.
A joint cell of the central bank and the NBR has been suggested to be set up to collect data on commodity and machinery prices in overseas markets to stop under and over-invoicing.
Source: Weekly Holiday