Staff Reporter :
The International Monetary Fund (IMF) have recommended the government take an inventory of assets belonging to all public officials every year and update it regularly aiming to reduce corruption adding that at least five high-risk banks in Bangladesh ought to be checked regarding money laundering and terror financingwhile stating a timeline up to next June.
Previously, the IMF had asked the government to collect asset statements from key officials only.
According to the IMF staff report published 25 June, “To combat high-level corruption effectively, it is essential to reinforce the asset declaration process for public officials by enforcing sanctions for non-compliance and adopting a standardised approach for the usage and regular updating of the declarations.”
Earlier on 24 June, despite failing to meet the net international reserves ceiling and revenue target, the International Monetary Fund (IMF) approved releasing $1.15 billion in the third tranche of a $4.7 billion loan package for Bangladesh.
IMF board approves 3rd tranche loan; $1.1b expected to be released in 2 days.
The information was disclosed in the report, which stated the IMF’s approval of the loan’s third tranche.
In the report, the multilateral lending agency also said, “Enhancing governance and reducing vulnerability to corruption would contribute to a better business environment. Further improvement in fiscal and financial governance, increased transparency, and strengthening of policy frameworks remain critical to enhance the business climate.”
“Progressive digitalisation of government administration and services will help promote transparency and reduce corruption,” the IMF said, adding that the authorities are modernising their supervisory framework on anti-money laundering/combating the financing of terrorism with IMF capacity-building assistance.
To this end, the IMF said the authorities have developed a tool to conduct risk-based supervision for money laundering/terrorism financing money laundering/terrorism financing risks with IMF capacity-building support.
“The authorities are committed to conducting onsite examinations of at least five high-risk banks by the end of 2025.”
Moreover, The IMF put this task among structural benchmarks for next 12 months as the executive board of the multilateral lender completed a second review of its $4.7 billion lending package and approved the release of $1.148 billion in the third tranche.
The lender interpolated the matter into the structural benchmark with an objective to improve anti-money laundering (AML) and combating financing of terrorism (CFT) status, said an IMF press release on Tuesday.
The global lender also recommended the government not to incentivize remittances.
“The recent exchange rate reforms make such an incentive for attracting inflows unnecessary. Consequently, the authorities are encouraged to reduce this subsidy below 2% and eliminate it eventually.”
“While there is no breach of the continuous performance criterion (PC) on multiple currency practice (MCP) as the subsidy was introduced prior to the IMF-supported programme, under the new IMF guidance on MCP which came into effect in February 2024, the subsidy for remittances triggered an MCP.”
According to the IMF staff report, the recommendations also include forming asset management companies in the private sector to reduce defaulted loans.
Finance Division officials say the IMF has developed AML/CFT examination procedures as part of its technical-assistance project and wants to check any involvement of Bangladeshi banks in money laundering and terrorism financing by using the method.
Most part of the money is being siphoned off through trade under-and over- invoicing, economists say. A US-based watchdog, the Global Financial Integrity (GFI), in a report in 2021 said Bangladesh annually lost nearly $8.27 billion on average between 2009 and 2018 from mis-invoicing of values of export and import of goods by traders as they want to evade taxes.
However, relevant state agencies have not been successful in preventing such money laundering or bringing back the money.
The IMF in the structural benchmarks for the next one year also has mandated that at least 50% of the value of central government transactions, excluding interest payments, subsidies, loans, equity, and liabilities, have to be carried out through electronic funds transfer (EFT) to improve budget execution and enhance fiscal transparency.
Also by the end of next June, the government will have to approve a development-project proposal (DPP) for digital transformation of income- tax administration, including e-return and e-payment framework, aiming to increase revenue collection to cover priority spending.
The IMF-designed priority to-do list includes issuance of guidelines by the Ministry of Finance and Bangladesh Bank to reform the primary-dealer system for government securities with an active set of players, focused on market-making functions, and with a balance between privileges and obligations by the end of June next year to help develop domestic capital market. To increase revenue collection for meeting the priority spending, the IMF asks the National Board of Revenue to finalize the Medium and Long-term Revenue Strategy covering indirect and direct taxes and an accompanying implementation framework by the end of December next.
There are currently around 15 lakh government employees in the country.
Bangladesh introduced the provision for public officials to submit their asset accounts every five years in 1979 in a bid to ensure accountability.
However, the rule could not be fully implemented in over four decades. In the past, ministries have reported that employees did not heed their call to submit asset statements.
According to rules 12 and 13 of the Government Servants Act (Conduct) Rules, 1979, government employees are required to submit statements of immovable asset acquisition, and sale.
The rules also state that government employees need to get permission from the government to even buy or sell any asset including land, houses and flats. In the case of the purchase of assets, the source of money should also be disclosed.
Besides, if any asset is sold, the price must be reported. During the caretaker government regime in 2007, strict orders were issued to submit asset accounts which resulted in all employees submitting them.
In 2015, the government asked to submit another round of asset accounts of employees. A few ministries then managed to account for the assets of the employees under their control, but most failed.