Economic reforms: White paper report on back burner
Despite the report's findings, concerns have been raised over the government's lack of engagement with the issues identified
Three and a half months have passed since the White Paper Committee submitted its report detailing unchecked corruption, misgovernance, the pilferage of public resources, and the exaggerated development narrative of the Awami League's 15-year tenure.
The 400-page report, delivered on 1 December and headed by economist Dr Debapriya Bhattacharya, was the interim government's first objective assessment of the inherited economic landscape. It revealed a "kleptocratic legacy" quantified as follows:
- An average annual illicit financial outflow of $16 billion between 2009 and 2023, exceeding combined foreign aid and FDI.
- $14-24 billion (Tk1.61-2.80 lakh crore) lost to political extortion, bribery, and inflated project costs out of the $60 billion development budget.
- Distressed bank assets (as of June 2024) sufficient to construct 14 Dhaka Metro systems or 24 Padma Bridges.
- Tk13.4 lakh crore funnelled through hundi transactions for visa purchases over the past decade, four times the Dhaka MRT 06 project cost.
Financial Sector Stabilisation
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The committee identified 28 primary corruption channels, including loan fraud, money laundering, overpriced projects, and non-competitive tenders.
Prior to the report, the central bank initiated actions to stabilise the financial sector. Bangladesh Bank has strengthened oversight, revealing the true extent of distressed assets. Fourteen troubled bank boards have been restructured, halting financial losses and protecting depositors' funds. Relatively strong banks have overcome liquidity and foreign exchange crises, while weaker banks are under scrutiny for potential mergers, acquisitions, or recapitalisation. Foreign exchange reserves have stabilised at $19.7 billion, and the exchange rate is now steady.
Pursuing Asset Recovery
The Anti-Corruption Commission and banks have filed cases against loan defaulters and suspected money launderers. The Bangladesh Financial Intelligence Unit (BFIU), previously unresponsive to global money laundering disclosures, is now active, conducting over 150 meetings with international partners.
The government has outlined a roadmap to recover laundered funds linked to 11 individuals and industries, engaging international firms to seize assets abroad. A special law will be formulated to accelerate repatriation efforts, with assistance sought from international organisations.
Bangladesh Bank Governor Ahsan H Mansur is scheduled to meet with international law firms and investigation agencies, and the central bank plans to co-host an "Asset Recovery Conference" in London in May.
While asset recovery may take time, a coordinated approach is underway. Experts suggest that regular monitoring and inter-agency coordination are crucial for success.
"When multiple agencies work on the same issue, coordination becomes complicated, and there can be delays in action," Zahid Hussain, former lead economist at the World Bank's Dhaka office, told The Business Standard earlier.
However, if these issues are resolved and progress is made, the government's initiative can be expected to succeed, he said, hoping that regular monthly meetings chaired by the chief adviser may ensure proper monitoring of the efforts to repatriate stolen money.
Reforming Development Projects
The interim government's planning ministry has also scrutinised slow-moving development projects, scrapping 11 railway projects under Indian credit, and approving two large-scale infrastructure projects with low-cost foreign funding.
The White Paper's Wider Impact
The White Paper Committee's report covered a wide range of economic issues, aiming to provide a candid assessment of the economy's "ground zero."
Despite the report's findings, economist Selim Raihan has expressed concern over the government's lack of engagement with the issues raised.
"I don't see much discussion in the government about the issues raised by the white paper committee or the task force. The government could have reached out to us and said they don't understand or that our recommendations are useless," said the professor of economics at Dhaka University last week.
