Recently ousted Prime Minister Sheikh Hasina fled the country, leaving behind BDT 18.35 trillion in government debt, accumulated from both domestic and international sources. When she took office in 2009, the government’s debt stood at BDT 2.76 trillion only. Over the next decade and a half, the debt ballooned by BDT 15.58 trillion, constituting about 85 percent of the total government debt. This alarming rise in debt over the past fifteen years is documented by the Ministry of Finance.
The government borrowed from domestic and foreign sources to cover operational expenses and fund development projects, as outlined in the budget. However, Sheikh Hasina's administration faced countless allegations of corruption and mismanagement. The banking sector, in particular, suffered from rampant plunder, with funds being illicitly transferred to countries in Europe and the Americas. According to an analysis by the US based research firm Global Financial Integrity (GFI), at least USD 149.2 billion. It is equivalent to approximately BDT 17.6 trillion (at the current exchange rate of BDT 118 per dollar), was siphoned off during Hasina’s reign. Meanwhile, Bangladesh’s net usable reserves have dwindled to less than 16 billion dollar.
Sheikh Hasina assumed the role of Prime Minister on January 6, 2009, after winning the ninth national parliamentary election. By December 31 of that year, non-performing loans (NPLs) in the banking sector amounted to just BDT 224.82 billion. By March of this year, the figure had surged past BDT 1.82 trillion. Bangladesh Bank sources report that when Hasina fled amid a mass uprising of students and citizens, non-performing loans had escalated to at least BDT 2 trillion.
Bangladesh Bank is the country’s regulatory authority for the banking sector. The autonomous institution was tasked with ensuring good governance and curbing irregularities and corruption. However, senior officials at the central bank have admitted that they were compelled to facilitate the looting of the banking sector. During a meeting with journalists yesterday (August 6), four deputy governors of Bangladesh Bank conceded, “We failed in our duties. To save our jobs, we could not fulfill our responsibilities.” Governor Abdur Rouf Talukder did not come to office that day.
In recent years, Bangladesh Bank has liberalized various policies, including loan rescheduling and write-offs, obscuring the true extent of non-performing loans. Banks that are 'owned' by influential businessmen and leaders of the ruling party had been allowed to operate with impunity, without proper audits. Banking insiders reveal that at least BDT 7 trillion in non-recoverable loans, including anonymous loans, rescheduled loans, and write-offs, has vanished from the banking system, with a significant portion laundered abroad.
Economists argue that while Sheikh Hasina’s government has built some infrastructure like roads, bridges, and metro rail under the guise of development, it has crippled the economy in the long term. She has destroyed the institutions of every sector including the financial sector of the country. They warn that unless immediate and effective economic reforms are implemented, Bangladesh faces a dire future.
Dr. Fahmida Khatun, Executive Director of Centre for Policy Dialogue (CPD), told Bonik Barta, “It is impossible to measure the financial damage and the amount of money laundered from the country over the past decade and a half. This is because no statistics in the country are accurate. For years, the government has consistently hidden information. To assess the economic damage, a strong commission needs to be formed immediately. This commission will evaluate the economic losses and prepare a white paper. Subsequently, a proper roadmap must be devised to revive the economy.”
Dr. Fahmida Khatun added, “Over the past 15 years, Bangladesh’s economy has turned into a mess. We used to say the economy was on the brink of collapse. Now, it has entirely fallen into the abyss. Pulling it out will require hard work, initiative, and focus. Along with stabilizing law and order, the primary responsibility of the new government will be to pull the economy out of this pit.”
According to the Ministry of Finance, in the fiscal year 2009-10, the government’s total debt from domestic and foreign sources was BDT 2.76 trillion. Of this, BDT 1.61 trillion was borrowed from foreign sources. The remaining BDT 1.15 trillion came from domestic sources, including the banking sector and national savings certificates.
During the first term of the Awami League, from 2009 to 2013, the rate of debt increase was relatively stable. However, during this period, the banking sector experienced significant plundering incidents such as the Basic Bank scam, Hallmark, and Bismillah scandals. While state-owned banks were looted, private sector banks were comparatively better off. In 2014, the Awami League returned to power in a one-sided election boycotted by the opposition. In that election, 154 Awami League candidates were elected unopposed. Upon their return to power for a second consecutive term, a new wave of plundering began in the banking sector. During this time, many private sector banks saw changes in ownership and rampant looting. Major entrepreneurs and founders were ousted from prominent banks like Islami Bank Bangladesh Limited and Social Islami Bank. Simultaneously, the government’s borrowing from both domestic and foreign sources surged abnormally. Conversely, the government’s revenue collection as a percentage of GDP began to decline, plunging the economy into disarray. In February 2016, the country witnessed an earth-shattering cybercrime when foreign currency reserves were stolen.
An analysis of Ministry of Finance data shows that between 2018 and 2022, the government’s debt from domestic sources, including banks, increased by nearly BDT 4 trillion. At the end of December 2017, the government’s total debt from domestic sources was BDT 3.2 trillion. By the end of 2022, this figure had soared to over BDT 7.17 trillion. Last year, when banks failed to lend to the government, Bangladesh Bank printed new money to provide loans to the government. As a result, the government’s debt from domestic sources ballooned to BDT 10.35 trillion. Alongside Bangladesh Bank, the government borrowed from various instruments such as the banking and financial sectors as well as national savings certificates. The government’s soaring demand for loans has also driven interest rates to double or triple their previous levels. The interest rate on treasury bills and bonds has now reached 12 to 13 percent, compared to 1 to 6 percent two years ago.
Over the past decade and a half, the government has borrowed excessively from foreign sources under the guise of development activities. In 2010, the government's outstanding foreign debt was only USD 20.33 billion. According to the Ministry of Finance, by February 2023, this debt had ballooned to USD 59.21 billion. However, data from the Bangladesh Bank shows that by the end of March 2024, the foreign debt of the government and its institutions had risen to USD 79 billion. At the current exchange rate of BDT 118 per dollar, the government's debt amounts to over BDT 9.32 trillion.
Economist Dr. Ahsan H. Mansur believes that the country's economy and institutional framework have deteriorated significantly over the past decade and a half. He told Bonik Barta, “To pull the country out of this economic decline, we need an honest, competent, and skilled finance minister and governor. The revolution led by the students and the people is unforgettable, but we must ensure that this revolution does not go astray or fail.”
Dr. Mansur added, “The macroeconomy is currently facing challenges such as high inflation, exchange rate instability, and a reserve crisis. These challenges can be overcome with appropriate measures. However, it will take a long time to repair the damage to the institutions. The students who led the uprising demanded reforms in the state. To reform the state, political parties must also undergo reform.”
Global Financial Integrity (GFI), a US based think tank, researches data on money laundering worldwide. According to GFI, between 2011 and 2018, approximately USD 90 billion was laundered from Bangladesh. From 2005 to 2014, an average of USD 6.4 billion was laundered annually. This average increased to USD 8.27 billion between 2014 and 2018. After 2019, money laundering from the country increased even more. Considering the average from 2014-2018, at least 41.35 billion dollar was laundered from Bangladesh between 2019 and 2023. Thus, during Sheikh Hasina's decade and a half of rule, from 2009 to 2023, at least USD 149.2 billion has been laundered from the country. At the current exchange rate, this laundered amount stands at BDT 17.6 trillion at least.
Previously, popular destinations for money laundering from Bangladesh included Switzerland, the United Kingdom, the United States, Malaysia, Canada, and some island states known as tax havens. However, in recent years, the destinations for money laundering have changed. Currently, Bangladeshis involved in money laundering are choosing safe destinations such as Dubai in the United Arab Emirates, as well as countries in the Middle East, Southeast Asia, or Eastern Europe. Politicians, businessmen, bureaucrats, police officers, government employees, and senior and mid-level officials of banks, financial institutions, and insurance companies are also involved in money laundering from the country.
According to the Swiss National Bank (SNB), in 2021, the amount of money deposited by Bangladeshis in Swiss banks reached 871.1 million Swiss francs, the highest ever recorded. Since then, deposits have declined. By 2022, the amount fell to 55.21 million Swiss francs, and by the end of 2023, it had further decreased to 17.71 million Swiss francs. Sources suggest that due to deteriorating relations between Bangladesh and Western nations over issues of democracy and fair elections, Bangladeshi launderers have been redirecting their funds from Swiss banks to other destinations.
In the past decade, Bangladeshis have made a significant presence in the UK property market. This includes both offshore properties registered under aliases and properties registered using Bangladeshi addresses. British government statistics reveal that in January 2010, only 15 properties in the UK housing sector were registered to owners with Bangladeshi addresses. By January 2016, this number had risen to 52. Five years later, by August 2021, it had increased to 107. Astons, a London-based firm providing immigration services under investment quotas to wealthy individuals from various countries, reported that between January and September 2020, Bangladeshis purchased approximately £122.9 million worth of prime properties in Central London through 98 transactions.
The EU Tax Observatory, analyzing data from the US-based Center for Advanced Defense Studies (C4ADS), found that 459 Bangladeshis had purchased properties in Dubai, UAE, by concealing their information in Bangladesh. Up to 2020, these individuals owned a total of 972 properties in Dubai, valued at around $310 million on paper. However, experts believe the actual expenditure to acquire these properties is significantly higher. Reports indicate that in recent years, the trend of Bangladeshis buying properties in Dubai has surged, with substantial property purchases being kept secret from authorities in Bangladesh. Various sources estimate that the hidden value of properties purchased by Bangladeshis in Dubai now approaches USD 1 billion.
Singapore, a major hub for international trade conducted by Bangladesh, ranks third on the global financial secrecy index. As one of Asia’s largest financial and commercial hubs, it has long been alleged as a prime location for money laundering. Sources suggest that import-export trade is the primary channel for laundering money in Singapore. Many businessmen in the textile and apparel sectors regularly travel there to import machinery. It is alleged that some of them exploit this opportunity to transfer funds illicitly.
In Malaysia's "Malaysia My Second Home (MM2H)" program, Bangladeshis rank fourth among participants. As of last March, Malaysia's Minister of Tourism, Arts and Culture, Tiong King Sing, reported that 3 thousand and 604 Bangladeshis had established second homes in the country.
Bangladeshis have also been known to invest in offshore havens like Barbuda, the Cayman Islands, and the British Virgin Islands. The Panama Papers and Pandora Papers have previously revealed information about Bangladeshis investing in these countries through offshore services companies. Besides, significant amounts of money have also been laundered to Singapore and Canada as well. The issue of Bangladeshis laundering money to buy properties in Canada’s "Begumpura" has sparked considerable controversy, with local Bangladeshi immigrants frequently protesting. Additionally, reports indicate that laundered money from Bangladesh is being funneled to countries in Eastern Europe, including Turkiye, Poland, Hungary, Romania, and Slovenia.
Amid a mass uprising by students and the public, Prime Minister Sheikh Hasina fled to India last Monday, accompanied by her younger sister, Sheikh Rehana. In recent days, numerous key government ministers, members of parliament, relatives of the prime minister, high-ranking officials, prominent businessmen, and many leaders of the ruling party have fled the country. Political analysts note that these politicians, bureaucrats, and businessmen have substantial assets abroad, including homes and vehicles. It is the greed of wealth that encouraged them to leave their leaders-activists and flee to abroad.
Dr. Zahid Hussain, former chief economist of the World Bank's Dhaka office, remarked, “Over the past decade and a half, the Awami League has constructed some infrastructure such as roads, bridges, and the metro rail. However, it has systematically destroyed every institution in Bangladesh. The judiciary, administration, police, Bangladesh Bank, Anti-Corruption Commission (ACC), and the Election Commission are all nonfunctional. Reviving these institutions will take many years. It is impossible to quantify the extent of the damage. The mandate of the interim government is crucial in the current scenario. The students do not want just a change of players but a change in the game itself. I believe that to save Bangladesh, every institution must be rebuilt from the ground up, starting with the political framework.”