La Semaine Dernière A Mes Yeux

(17 juin --- 24 juin)

Selon un reportage, l'argent clandestin de Banglaidais dans les banques suisses a augmenté en 2021.À la fin de 2021,il est devenu 870 millions franc suisse.

Selon un reportage,pluies torrentielles,un record en 122 ans,ont inondé Sylhet,Moulavibazar,Sunamganj,Netrokona,Kurigram et une dizaines de villes en immobilisant millions de villageois.Les utilisateurs de réseau social Facebook ont affirmé plusieurs vols dans quelques villages inondées.Le bilan de dégâts à Netrokona est TK 150 milliards.Inondation a lavé centaines d'élevage de bovin,d'aviculture et 11.000 tonnes de poisson depuis étang. À Sylhet,21.000 villageois on pris refuge dans abri d'urgence.L'aéroport de Sylhet a été submergé.

Selon un reportage, le gouvernement a décidé de fermer tous les magasins après 20 heures du soir pour économiser le carburant et l'électricité.

Ma Semaine Gastronomique

Date	Petit-déjeuner	Déjeuner	Dîner	Snacks,Sucrerie et Fritures
18	Pain tchapati,Omelette,Courge amère,Thé sans sucre	Riz,Crevettes séchés avec graines de Jacquier,Ruhi poisson,Calebasse gourde	Riz battu au lait chaud avec dattes	Jamrul/Champoo,Pois de chiches et Niébé avec riz gonflé,Thé sans sucre
19	Pain tchapati,Papaye et pommes de terre,Jacquier, Thé sans sucre	Riz,Feuilles d'amarante tige,Ruhi poisson avec gourde pointue et pommes de terre,Courge amère et lentilles,Citron,Poivre	Crêpes(fait par moi),Courge amère et lentilles	Niébé et pois de chiches,Thé sans sucre et datte,Aloo pury(un type de friture populaire, préparé comme crêpe rempli avec purée de pommes de terre)
20	Pain tchapati,Œuf à la coque,Papaye et pommes de terre bhaji,Thé sans sucre	Riz,Amarante tige,Gourde serpent, Ruhi poisson,Soupe de lentilles	Riz battu dans lait chaud et jacquier	Jacquier,Thé sans sucre
21	Pain tchapati,Papaye et citrouille,Œuf dur, Thé sans sucre	Riz,Ruhi poisson,Gombo, Épinards d'eau	Pain tchapati,Papaye et Citrouille	Jacquier,Riz gonflé,Thé sans sucre
22	Pain tchapati,Œuf dur,Gombo,Thé sans sucre	Riz,Soupe de lentilles, Gombo,Omelette	Riz,Papaye et Haricot vert,Cornichon à la Mangue dans Soupe de lentilles	Jacquier, Thé sans sucre,Riz battu dans lait chaud avec dattes
23	Pain tchapati,Papaye et Haricot vert,Thé sans sucre	Riz,Loofah avec Niébé et Haricot vert,Puntio barbe,Jacquier	Riz battu dans lait chaud, Jacquier	Jacquier,Riz gonflé,Concombre,Arachides,Graines du jacquier,Thé sans sucre
24	Pain tchapati,Omelette, Jacquier,Thé sans sucre	Riz,Épinards malabar,Gourde épineuse avec Ruhi poisson, Soupe de lentilles	Riz,Épinards malabar,Puntio barbe	Riz gonflé, Thé sans sucre

What Does Wild Fall Of Taka Portend?

Wild fall of Taka causing worries,
Most blame goes to deferred LCs.
Before and after election year,
Gathers abroad illicit capital sheer.

The rapid fall of Taka against major currencies has become headlines recently.Central Bank is selling dollar at Tk 86.70.However, at the exchange market US dollar is selling at TK 93. This rapid depreciation of Taka has been reported to be caused by rising commodity prices,settlement of deferred Letter of Credits, lack of foreign tourists, and rising trade deficit¹.

Government even issued notice banning unnecessary travel of the bureaucrats. But I think bureaucrats’ visit abroad and lack of tourists are poor reasons attributed to wild fall of Taka.The two represent a miniscule part of demand for dollar. The ban came at a time when a minister and her relatives’ visit to another country drew lot of flak in the press. Later, minister claimed that she paid her own expenses and never relied on public money for meeting the expenses. So govt's ban is a diversion to pass the blame to others.

Unease of the govt is compounded by falling remittances, which earlier offset trade deficit and made a current account surplus. In addition, medium and long term debt commitment has also increased, but as percentage of export earnings it is still below 25%(as per my calculation).Along with Occidental multilateral institutions, which are more generous towards Bangladesh, Russian and Chinese credit repayments do not pose serious problem for the moment. Loan repayments of Russian credit line would start from 2023 and some social media put the annual payment somewhere between $565 million. The Ban on Russia and Russian decision to repay the credit in local currency would not cause pressure on US dollar demand. However, such ban could increase dollar demand if US dollar payment could take place in disguise of legitimate international trade via other friendly countries. It is hard to trace such trade payment, so it is better not to embark on such speculation.

So the single reason stands out among others is the deferred LC payment. Most of the LCs opened for importing capital machinery, raw-materials,cooking oil and grains².Rising commodity prices also raised the import expenditure and it is causing the depreciation of Taka. Now here comes another point that we are missing. 2022 is the year before the election scheduled to be held in 2023. Years before and after the election generally witness illicit financial outflow through trade misinvoice. Bout of skirmishes and deteriorating law and order sow panic and lack of trust on domestic system among some quarters. Panic mongers work as sales executive of places where illicit capital finds safe sanctuary.

In an embarrassing report in 2017,Global Financial Integrity (GFI) revealed worrying accounts of illicit financial flow from Bangladesh between 2009 and 2015 with an average flow of $ 8.8 billion. The mismatches between declared value of goods on the invoices and true value of goods were reported to be $5.2 billion in 2008, $6.9 billion in 2010,$8.8 billion in 2011,$7.65 billion in 2012,$9.35 billion in 2013 and $11.92 billion in 2015 ³.As US places sanctions on some personnel of law enforcement agencies for violating human rights, many are under spell of panic. In addition, retribution in politics looms large. Political situation in neighboring countries makes that threat more credible. So exists there a perfect ground for clandestine capital flight through trade anomalies.

However, Canada postponed its residency permit through purchase of flat for two years. But our RMG items are being regularly exported to Canada. And recently one Canadian minister expressed desire to export cooking oil to Bangladesh. So ample means are there to channel out the money.Moreover, Turkey recently opened 2nd-home program like Malaysia. UAE is also running similar campaign.

Two or three quarters later a picture may emerge about the volume of illicit flow. As it happened in the past, this speculation---illegal money transfer through trade data anomalies---may have some roots and may be a reason for depreciation of Taka that is widely ignored.

This depreciation of Taka will work as instrument to curb further import as import is going to be costly. Meanwhile, govt is going to receive another $250 million of ADB’s budget support pretty soon,as reported by the press. Hopefully, Taka will be hovering over some fixed figure for sometimes after that.

Notes And References:

1 “ Dollarer Bazar Osthir,Oshosti(Volatile Dollar Market, Causing Unease)”,Sanaullah Sakib,Daily Prothom Alo(page-1),May 12,2022.

2 “Bank O Khola Bazar E Dollarer Damer Parthokya 8 Taka Chhariyechhey( Difference Between Dollar Exchange Rate At Bank And That Prevails In Market Crosses Taka 8)”,Sanaullah Sakib, Daily Prothom Alo(page-01),May 13,2022.

3 “Bangladesh Lost $50 Billion To Trade Related Illicit Financial Flows In Six Years: Report”,bdnews24.com,December 17, 2021.

Republic Of Plunderers & Parasites

What an spectacle of victory!
Inequality,discrimination bury the glory.
There is growing sign of parasitism.
Citizens see no sign of optimism.
As cruel toddler treats its pet,
Smart elites flee abroad to secure their fate.

As Bangladesh steps towards celebrating its 50th anniversary next year, dissimilarities, discrimination, injustice and inequality it fought 50 years ago become more shockingly visible. Cheerleading for overpriced infrastructure projects, where contributions of Bangladeshi companies are infinitesimal and whose implementation are dominated by foreign companies, boasts jingoistic attitude that has little impact on vernacular life of common people. Embryonic zeal of self-determination has turned into parasitism. No short of excuses to misappropriate public money. From private companies to individuals,all depend on government money for survival. This trend could be found from social security expenditures to incentives for business. Even parasitism has become endemic in individual life. A rent-seeking class has emerged, exploiting others' hard earned income. Land grabbing, forest grabbing, extortion, squeezing father-in-law (sometimes brother/sister-in-law or in-laws in general) whenever odd situation strikes have become common practice in order to prosper in personal life.(Nowadays stealing someone's creative work, article, plagiarism are also becoming pretty common; another indication of growing sign of parasitism). Four decades ago ,these things could be viewed as taboo and criminal act. Now they become integral part of Bengali's DNA.Even a decade ago , extortion in the name of " Mukh Mithai"(Sweetening Mouth) was seen as serious transgression. Now everyone gets used to it!

No government spokesman, partisan expert, government statistical pocket book will ever publish this unpleasant truth. Unfortunately this is the reality stands before us in 2020.

There has been delay in publication of Household Income Expenditures Report, which has little credibility. I personally found data mismatches in annual report of Bangladesh Bank and on website of Board of Investment. I also found anomalies in PDF versions of statistical pocket books. Why does a successful and confident government want to hide and fidget data?

Today's Bangladesh contravenes breaking up of Pakistani feudal structure. In fact, feudalism is consolidated in Bangladesh. Wealth has amassed into the hands of few people. Bangladesh outperforms other countries in generating super rich. From DTH service to COVID vaccination program, all are being done by powerful cronies. During the lockdown, I took notice of a news item that revealed that family members of a former minister and businessman left Bangladesh for London on a chartered plane. Former opposition party minister turned out to be relative of ruling party crony through the marriage of their son and daughter.Months after months staffs of former minister's cell phone company demonstrated on the streets for their dues after the company had been incapacitated by lack of bank credit and government cooperation. The former minister and his son already laundered huge money in Singapore. In my earlier piece, I elaborated how mismanagement and corruption in the banks contributed to piling up of Non Performing Loans (NPL).

In rural village, poor people sell their meagre land to loan sharks or local elites in order to go abroad to make a fortune. Policy change, deception, international crisis often lead them to lose their land. Rural land, due to presence of erroneous land dispute settlement, are concentrated into the hands of few powerful people.

Five decades ago, when we got liberated from Pakistan, we owe to Pakistan around $ 5 billion. Now more than $ 5 billion , some estimates put the figure somewhere around $15 billion, are laundered from Bangladesh every year. So Bangladeshis outdid the Pakistanis exploiting the local economy and laundering wealth abroad.Sense of insecurity and hopelessness have increased in magnitude in five decades. Where is the progress in independent Bangladesh?

Three or four decades ago Bangladeshi constructors and engineers built roads and utility lines in Middle East and Maghreb.Now Libyan coast is washed away with Bangladeshi migrants who are desperate to take a perilous boat ride to Europe. Just couple of months ago, Reuters carried out a special story on stranded Bangladeshi in Bosnian jungles.Even in Pakistani period, when poverty was so abject, people did not flee the country in drove. Why are so many people fleeing abroad clandestinely from independent and prosperous country?

Business malpractices also reach worrying level. Earlier adulterating milk with water was prevalent. Now no business is without malpractice. Digital weighing scale is deliberately tempered to give less amount of goods to consumers. Mobile data pack and other services often do not yield the promised amount. Since it is hard to fathom the true consumed value, such malpractices often go unnoticed. Bus fare, auto fare are artificially hiked to whiten black money.

During the colonial time our educational institutions produced brightest minds and there was liberty in freedom of expression.Had there been no freedom of expression, Bengali language would not get the status as it is enjoying now and our struggle to independence would not culminate into full blown armed struggle.

There had been skirmishes and assault on teachers. But now students and teachers both lost their lives in campus. Even teachers cannot speak their minds in campus. Prof Ajoy Roy who taught several decades at Dhaka University despite repeated pleas from relatives in Kolkata to settle there had to bear the news of his son's killing at the university premises. Prof Human Azad, one of the brilliant linguists both Bengals ever produced, was attacked with machete at the university. His son on several occasions was also assaulted at the university.They were attacked for expressing their views and speaking their minds.

Same kind of incidents were purported in other universities.

In the Pakistani period, even undergraduate of a mofussil town knew three languages--- Urdu, English, Bengali--- and wrote impeccable English. From the autobiography of historian Tapan Roy Chowdhury I came to learn that a library in Borishal even ordered French book from foreign publishers because there were readers in that village. We do not have that kind of libraries or independent book shop now.

Back then university produced graduates whose ideas and innovation found global platform and audience. Composite material that was used to build F-15 fighter jet, a reliable platform for many Air Forces, was the brain child of a Dhaka University chemistry graduate. Quantum statistics, which revolutionized scientific analysis, was born at the Curzon Hall in Dhaka University.

Now Pakistani universities assemble their own satellite, excel in reverse engineering , build jet prototypes.

Where are we now? Is there really any intellectual advancement in Bangladesh?

I do not understand why in a well functioning economy there is a silent invasion of drugs. Today yaba or methamphetamine market in Bangladesh is worth $5 billion. The autobiography of veteran journalist Abdul Gaffar Chowdhury shed some light on the tobacco related business in the Pakistani period. Back then 1 million people were employed in "Tendu Pata"(tobacco leaf) related business. Now hardly any business or vocation left where drug money is not invested.

The whole real estate sector is thriving on undocumented money. Government does not question origin of the money invested in real estate sector. Buying and selling flat have become popular mode of legalizing black money as less paperwork is required.Politics has become more violent as black money finds safe sanctuary in politics. Back in pre-independence days , this was unthinkable. Seasoned politicians had some principles back then.

Last leg of Pakistani period witnessed a boom in setting up educational institutions across Bangladesh. Now we see a contest to set up religious seminaries across Bangladesh on empty government lands. Such seminaries guarantee steady stream of revenues from devotees and government does not ask for any explanation how the donation money is spent. In addition, setting up such seminaries brings lucrative donations from Middle Eastern countries. So there is a rat race to become member of the management committee of religious seminaries.

Now there is no public service job quota for women. Stipend program for women is slashed. Minimum marriage age for woman is lowered. Literary works by writers of other faiths are taken off from school text books. Where are we heading ten years later?Should there be any reason to remain complacent?

Bangladeshi rulers have proved that they are the worst rulers than the English and the Pakistanis. Compared to the Bengalis, they were farsighted and compassionate. That was why they built institutions. Bengali rulers treat their citizens like a sadistic toddler treat its pet.All their efforts end up making the country a nightmarish hell.Smart ones among the ruling elites purchase foreign identity. And for the commoners, there is no escape from this republic of sadistic plunderers and parasites.

The Untouchables

Black money lies idle in foreign bank.
Among the launderers are leaders in high rank.
No accountability in institutions feeds the anarchy.
Progress made so far is in jeopardy.

A Bangladeshi daily recently divulged that Anti Corruption Commission had found $1 billion worth of money deposited in a Singaporean bank. The account had no nominee. It belonged to a Bangladeshi citizen. The report claimed the owner of the account was a Bangladeshi politician who was hanged for war crimes he had committed in 1971. His wife and children abstained from claiming the money, following their lawyer's advice to avoid any legal repercussions.

The incident once again laid bare gravity of corruption and money laundering taking place in Bangladesh. When it comes to plunder people's money, both the ruling party and the opposition are found on the same boat.

Earlier Singaporean media and Panama Papers revealed that brother of a ruling party politician and owner of a Bangladeshi corporate group was included in the list of Singapore billionaires. Despite the zero controversy involved in amassing the money, political connection and how the wealth was amassed provided enough air to run the rumor mill wild.

Hanged opposition politician was parliamentary advisor to then PM. In addition, he had run his own business affairs. His family members also head several business conglomerates in the country. Similarly, brother of the Bangladeshi billionaire in Singapore once headed the parliamentary committee for defense and held important portfolios.

Revelation of their documented and undocumented wealth in the media while they are holding important positions exposes impunity and less regard to public perception enjoyed by some public figures. In a civilized country, such revelation will lead to fall of government or resignation of concerned person.

Only recently government bodies displayed great concern and effort to detect and recover such clandestine wealth. Earlier such bodies were reluctant to make a move in this regard. The institutions established to detect and provide regular info about such wealth failed to live up to their utility. I came across an investigative report, carried by an online news outlet based in a foreign country, couple of months ago. It revealed that brother of the chief of a powerful institution, who received president's mercy for killing a person, was seen in a gathering with a notable politician of an off-shore heaven country in South East Asia. I previously ignored the report considering it as a political propaganda. But the recent news report evoked the photograph of that investigative story and underscored the nexus between such institution and corruption taking place at political corridor.

Earlier a report about a businessman who mediated arms purchase caused consternation in local press. He amassed huge fortune in Swiss banks and even appeared before Anti Corruption hearing.

Lack of accountability of these institutions perpetuates corruption and propels capital flight from the country towards off-shore heavens. The lack of accountability also let the vested quarter take unfair advantage of these institutions.

Meanwhile, inaction of these institutions also help seeding distrust and fear into the minds of the people. This hopelessness, in turn, contributes to capital flight and human trafficking. So one is feeding the another.

When disciples of rigid ideologies challenged existing laws, customs, traditions defying laws on the streets, it would not be naive to surmise this kind of statement. Specially when some of them found safe sanctuaries in many off-shore heaven countries. Even the architect of rapprochement between disciples of rigid ideologies and government breathed his last at a specialized hospital in Singapore this year. It is indeed interesting to see that the mastermind did not feel confident to take treatment in a country that is evolving under his mediation.

Let's just set aside the high profile political money transfer. Literally, businessmen, politicians, bureaucrats regularly launder money abroad. No one would raise concern if Bangladesh were a prosperous and welfare country. And inequality reached such a worrying level.

Advertisement of an international LED television manufacturer struck me. It pleaded the consumers to purchase LED TV set at a set price before the limited stock got finished as the manufacturing plant in Malaysia was shut down because of COVID-19. 170 million consumers' LED TV manufacturing plant was built in Malaysia! Sometimes I wonder how Bangladesh has become peripheral colony of off-shore heavens with the assistance of local powerful institutions. From cooking oil to port fees , this trace of hidden colonialism can be found.

In Bangladesh, we see sales executive of local commercial banks solicit people to bank with them and to have a credit/ debit card of their banks. Sometimes I have this weird feeling that perpetrators of corrupt acts, rioters, hatred preachers, disciples of rigid ideologies work just like sales executives of off-shore heavens to get new clients for them.

We are paying a high price for lack of accountability in key institutions. Bangladesh has been turned into a lawless jungle, a dumping ground of obsolete ideology, a transit route for drugs, a safe sanctuary for human traffickers, home of nouveau super rich and a paradise for money launderers.

Fortune lying idle in foreign banks is a stark reminder that establishing accountability in key institutions could stem the generation and laundering of such wealth.

Violence & Capital Flight

Violent election year
Generates enough fear,
Speeding clandestine capital flight
If level of significance is right.

Global Financial Integrity has recently brought out its another report on illicit financial flow. Unlike previous reports, this time it underscores trade invoicing took place between 2008 and 2017. Illicit Financial Flow was broad and covered many areas. This report concentrates on trade mismatches. However, I did not get the relevant data for Bangladesh up to 2018. Much of the recent data were not available.

The 2015 report was complete and I found it handy back then. Immediately after the 2015 report , I tried to find out any possible link between political violence and illicit financial flow. Was there a correlation between the two? There was a little bit of correlation.

I still hinged on that 2015 data and looked on whether election years have any differential effect on illicit financial flow. For the political violence data, I relied on Odhikar, an NGO works on human rights issues. And from 2015 report I gleaned the data on illicit financial flow.

The regression function I constructed looked like this:

lnIFF_i = a₁ + bPolViol_i + a₂ D_i

where lnIFF_i= log natural of illicit financial flow,
PolViol_i= victims of political violence,
D_i= 1 when the years are election years; prior and after years fall here.
= 0 when the years are normal years.

Here a₂, coefficient of dummy variable, captures the differential effect of election years.

Since the data is time series in nature, I checked for autocorrelation. Durbin Watson statistic prior to natural log transformation reported 1.40 for 10 observations and 1 explanatory variable.

Then I carried out the semilogarithmic regression. At 5% level of significance, the model did not turn out to be significant. F= 3.339, p=0.095 (for degrees of freedom 2 and 7) . However it is significant at 10% level of significance. The intercept, a₁=8.273, appeared to be significant (t=44.79, p=0.000000721). The slope coefficient of political violence, b=0.000013, turned out to be insignificant (t=1.099, p= 0.308). The coefficient for dummy variable, a₂=0.4210 was found to be insignificant (t= 2.116, p=0.0720). However, it was significant at 10% level of significance.

Stat analysis did not find any evidence of differential effect of election years on illicit financial flow. What is interesting is that if the level of significance is raised at 10% level of significance then there is evidence that election years have some kind of differential effect on illicit financial flow. However, slope coefficient of political violence is still insignificant.

Let's interpret the result. At 10% level of significance, mean illicit financial flow of election years was higher than non-election years by 50.97%. As election years were more violent, as reflected in the political violence stat, more people laundered clandestine money abroad.

Based on higher level of significance , there is statistical evidence that violent election years accelerated the process of illicit financial flow. Clearly panic has its own economics. Sowing panic has intended /unintended consequences. However, finding conspiracy theory is not my goal. But my endeavor to see effect of violent election years on clandestine capital flight was not a failure.

Decoding Our External Sector

 This week I tried to take a deeper look into the composition of our import expenditure and export earnings.Import always dominates over export in our external trade. I am more interested in what constitutes the import and export items. In addition I tried to find link between illicit financial flow and our external sector.

I delved into the sententious stat given in the appendices of Bangladesh Bank annual report. I leafed through several annual reports starting from 2013-2014. I was befuddled when I had found that data were not easily tractable in subsequent reports. Data of many of the import items lack coherence in subsequent reports. For instance, I checked the data for food, edible oil, textiles, capital machinery and other import items for Fy2011, FY 2012 and FY 2013. To my dismay, I found that what was  reported in the annual report of 2013-2014 was different from subsequent annual reports. If this is the case for immediate past year, then the data maybe provisional or revised, as often indicated by Bangladesh Bank. But for the report of 2013-14 this is not the case. And I remind you I am talking about here about three consecutive fiscal years: 2011,2012 and 2013. For the above mentioned items in 2013-14 report ,reported data are not identical in subsequent annual reports. By the way, data in the annual reports for 2014-15, 2015-16 and 2017-18 are similar.  I got the PDF format of the reports from Bangladesh Bank website.

While decoding our investment for an earlier post, I also faced ordeal in gleaning information. To my horror I noticed that proposed investment figure in Tk  published on Bangladesh Investment Authority website was deliberately swollen. Someone tempered the figure by putting an extra zero at the end of the figure. Luckily I had checked the data with the one reported in Bangladesh Economic Survey. I also endured similar problems while I collected data  from Police websites. I think webmasters and persons responsible for running the government websites should be more scrupulous.

Now get back to the import data. To obviate the troubles in analysis, I depended on the most recent annual report and for data on earlier fiscal years (i.e.FY2008, FY 2009) I trusted the annual report for 2013-14.

Our import is composed of many items. Among them food grains, edible oil, POL,chemicals, fertilizer, plastic, raw cotton, yarn, textiles, iron & steel, capital machinery and other items constitute the biggest part of  import spending. Others( other items) alone turns out to be the the biggest contributor to import spending, followed by textiles, capital machinery, iron and steel, POL and raw cotton. For instance, provisional estimates of 2018 shows that we spent $6.8 billions on textiles, $5.46 billion on capital machinery, $4.83 billion on iron,$3.65 billion on POL, $3.25 billion on raw cotton and $ 15.88 billion on other items.And our import spending on textiles, capital machinery, iron and steel , yarn and raw cotton has been increasing for many years. Many of these items are used as ingredients of manufactured goods and used in setting factories or implementing development and investment projects.

On the other hand , decomposition of our export items reveals that woven garments, knitwear, home textile , footwear and jute goods fetch more foreign currency for our economy. For instance in 2018, woven garments brought $15.43, knitwear, fetched $15.19, home textile earned $878.68 million , footwear accounted for $809.69 million and jute goods brought $869.87 million. Woven garments, knitwear and footwear registered consistent growth over the years. It is highly compatible with our growing external sector. Projection made by Bangladesh Bank shows that both export and import will continue to grow in the coming years.

(Data Source: Bangladesh Bank , GFI)

Global Financial Integrity in its report on illicit financial flows claimed that between 2004 and 2013, a total of $55 billion was laundered abroad from Bangladesh. In January this year, in its new report GIF claimed that in 2014 $9 billion was drained out of Bangladesh. Moreover, in 2015 at least $5.9 billion was laundered abroad. Now many of the illicit transactions had taken place through trade misinvoicing, as reported by GFI. In export bill, export earnings are reported less than the true amount. In import bill, import spending is reported more than what it actually is. In addition, fake documents are created to do import and export by trading nothing or trading goods that value less or more than the true reported goods.

So the more our external sector grows, the more our hard earned currency launders abroad. According to GFI, gross trade misinvoicing in the period between 2004-2013 was $92.02 billion, of which $49.13 billion was trade misinvoicing outflows and $42.89 billion was trade misinvoicing inflows that means Bangladesh also witnessed illicit inflows of capital in the above mentioned period. If we break trade misinvoicing  outflows further, we will see over invoicing of import bills accounts for $18.21 billion of the total outflows and under invoicing of export bills accounts for $30.92 billion of the total outflows. To be more precise, in the given period we loss on average $1.8 billion due to over invoicing import bills and $3 billion due to under invoicing export bills every year. In light of this  we can say export sector is more responsible for illicit financial outflows than the import sector.

This thing is happening when we are having a current account deficit. We need to export more, import less and get more remittances in order to improve the current account situation. Government put forward lots of cash incentive packages to increase remittances and augment the export. Many economists opposed the move and pressed for depreciation of Tk. To them, it will augment the export, remittances and at the same time it will restraint the import.

Just bring  the illicit financial flow into play. In this case any initiative to boost export has a caveat: chances of illegal capital flight have also gone up as per our earlier discussions. But the idea of depreciation of Taka instead of cash incentive appears to be reasonable here. By slowing down import for some period it will curb the clandestine capital flight associated with over invoicing of import bill. At the same time it will increase the risk of capital outflow through under invoicing of export bill. If the former outweighs the latter then we can say that this depreciation measure will be boon for the external sector. Another note of caution is that slow import  will also stall the clandestine capital inflow through under invoicing of import bill, which was $42.9 in the given period. So curbing the money laundering and improvement of current account deficit put our policy makers in quandary.

Money laundering has been taking place for a long period of time. In a corrupt country these bad practices are deeply rooted in our society.We would  stem the trade misinvoicing if we were able to device the means. Since we do not have that mechanism, depreciation of Taka appears to be an acceptable solution right now to improve the current account situation.