Presenting a dismal picture of the national economy Centre for Policy Dialogue (CPD) on Sunday said that it strongly believes huge amount of money is being laundered in the disguise of import business.
“Some 40 percent growth in import against last fiscal`s 17 percent is definitely unmatchable with the economic trend considering its overall performance,” said CPD Distinguished Fellow Dr. Debapryia Bhattacharya while making his observation during a presentation on `State of the Bangladesh Economy’ in FY 2017-18.
He said all evidences made the CPD believe huge amount of money going abroad in the name of import and ahead of election such money laundering gets increased.
This has been the CPD`s third reading as part of its `Independent Review of Bangladesh`s Development` that was presented at Brac Centre Inn in the city.
The CPD concentrated its observation mainly on three sectors of the economy—finance and banking, capital market and external economy.
The main concerns came out focusing the continuously deteriorating performance of the banking sector and growing imbalance in the external trade and foreign debt.
About the banking sector, CPD Distinguished Fellow Mustafizur Rahman showed than non-performing loan (NPL) now stands at 9.5 percent in Bangladesh as against two to four percent in the East Asian countries.
“The most concerning is that the bad loans are increasing rapidly and the NPL is highest in Asian region.”
He said the frustrating issue is that Bangladesh is not taking any effective measures in reducing the NPL while India and other countries have been continuously taking effective measures.
Debapryia Bhattacharya said banking sector in Bangladesh is like an orphan and the government is oppressing that orphan. “In one word it`s a perverse political economy”, he said expressing his disappointments over the banking sector.
He, however, recommended for creating a commission on banking sector so that the next elected government cannot forget the issue of the banking sector.
On the external economic issue, the CPD showed that a serious imbalance is being created in the external economic relation by taking very costly foreign loans. Secondly, some projects are over capitalised compared with actual cost.
It said many mega projects being implemented with foreign debt will put up pressure on foreign exchange which ultimately pushes up inflation by raising import cost.
“As a result, the bank interest rate will go up creating a pressure on the economy”, said Dr. Mustafizur Rahman.
Dr. Debapryia said the country`s revenue collection will experience a deficit of about Tk 50,000 crore in the current fiscal 2017-18.
He said the main challenge of the government in the coming budget will be increasing the tax-GDP ratio.
Criticising the government`s move to lower the corporate tax, the CPD said no country could be able to raise revenue through such measures.
It said creating enabling business environment is more important than reducing corporate tax for increasing the revenue collection.
It said the government should take steps to release the revenue now stuck up in the court case over disputes on taxes.
There should be steps for outside court settlement system to resolve such disputes to release the stuck-fund, said the CPD.
The think tank body also express grave concern over the government`s increasing dependence on borrowing from saving instruments like NSD.
It said due to borrowing from NSD, the government will have to pay Tk 32,000 crore as interest in the current fiscal.
The CPD observed that the saving certificates are sometimes misused as many rich people buy the instruments for higher profit.
CPD Executive Director Dr. Fahmida Khatun and Director Research Dr. Golam Moazzem were also present at the function.