A report from Bangladesh-based The Business Standard has raised concerns about governance and ethics in Bangladesh, suggesting that the country’s official budget and revenue shortfalls may indicate deeper issues. The report warns that unless measures are taken to reduce corruption and extraction, Bangladesh is likely to continue facing challenges. The National Board of Revenue in Bangladesh has set a collection target of around Tk 6 lakh crore, but analysts have repeatedly observed significant shortfalls.
The government in Bangladesh has proposed a budget of approximately Tk 9.3 lakh crore, projecting a fiscal deficit of about Tk 2.43 lakh crore, equivalent to 3.7% of GDP. Recent deficits at the National Board of Revenue have varied from Tk 40,000 crore to over Tk 1 lakh crore. The report points out that while the country grapples with budget and revenue deficits, the real issue lies in what it terms the ‘EGG deficit’ – the deficit in ethics and good governance.
According to the report, discussions following the budget announcement often focus on aspects like the size of the budget, fiscal deficit, revenue targets, shortfalls, and borrowing requirements, overlooking the core issue of governance deficits. It is estimated that a significant portion, possibly up to 40%, of public expenditure in Bangladesh is lost to extraction, with some studies suggesting lower but still substantial leakages. The report argues that much of the budget deficit is a result of systematic extraction within a system captured by the elite.
The report also highlights that despite the existence of substantial wealth in Bangladesh, misgovernance has led to a situation where a significant portion of taxable wealth remains beyond the effective reach of the tax system. Luxury consumption and high-end real estate continue to thrive, indicating a disconnect between wealth generation and effective taxation in the country.
