Black money whitening slammed as 'useless'

Planning Adviser Dr. Wahiduddin Mahmud has strongly criticised the continuation of black money-whitening provisions in the proposed national budget, calling them "ineffective" and "unjustified."

Speaking at a policy dialogue on Saturday, he argued that legitimising untaxed wealth undermines fairness and fails to yield meaningful economic benefits.

"If someone buys a property worth Tk 50 million but cannot show even Tk 10 million in legal income, how can we justify giving them a clean slate?" he said, urging the government to scrap the controversial measure amid rising public concern.

Dr. Mahmud was addressing a budget discussion titled "Budget FY2025-26 in the Context of LDC Graduation" held at a city hotel.

The event was organised by the Research and Policy Integration for Development (RAPID) with support from the UK's Foreign, Commonwealth and Development Office (FCDO).

He added that the issue has already triggered enough public debate and should be withdrawn altogether. However, he acknowledged that the provision may still remain in the final budget as a tool to regularise undisclosed income, possibly with added penalties.

Dr. Mahmud also pointed out that the additional allowances for officials involved in development projects are not being curtailed, primarily due to fears of unrest among government employees. This, he said, makes cost control in development spending particularly challenging.

He emphasised that reducing corruption and unnecessary expenditures in project implementation could significantly lower the government's operating costs. "During the previous administration, there was around 10 per cent corruption in projects due to tender collusion," he noted.

On social safety nets, he acknowledged increased allocations and beneficiary numbers in the current budget but warned that 30 to 40 per cent of listed recipients might be politically favoured rather than genuinely eligible.

He urged field-level scrutiny to weed out ineligible or dishonest beneficiaries.

Dr Mahmud, who also served as Education Advisor to a former interim government, recalled the difficulty in appointing qualified individuals in a politically divided environment.

He shared that he even consulted BNP Secretary General Mirza Fakhrul Islam Alamgir while selecting vice-chancellor candidates during his tenure.

"The biggest weakness of a non-partisan government is not knowing people well enough. There were so many vacant positions, but we didn't know who to appoint," he said.

While he received suggestions from different political parties, he also relied on personal networks to identify competent candidates. As the interim government's term winds down, he stressed the importance of transparency.

"Before we leave, we want to publicly document what we've done-not for publicity, but to leave a benchmark. If future governments deviate, at least people will be able to see it."

Dr. Mahmud also dismissed any notion of reversing Bangladesh's LDC graduation.

However, former BGMEA President Rubana Huq expressed concern, saying, "This is supposed to be a preparation plan, but we are not ready at all. It's not a matter of prestige but a matter of reality."

She stressed the need for stronger economic diplomacy before moving forward. Commerce Secretary Mahbubur Rahman countered that further delays would appear as unjustified demands.

"We officially graduated in 2021. We are now in a kind of grace period-three years plus another two. If we request another three to  five years, it may seem like a demand rather than a necessity," he said.

Member (Secretary) of the General Economics Division (GED) Monzur Hossain echoed the stance, saying the graduation must proceed as planned.

RAPID Chairman Abdur Razzaque noted that the FY2025-26 budget reflects attempts to manage severe macroeconomic stress amid limited fiscal space and the transition from LDC status.

He observed that while some stabilisation measures are in place, broader reforms remain constrained.

"Bangladesh's fiscal space is among the tightest globally, with public spending at just 12-13 per cent of GDP and a tax-to-GDP ratio below 8 per cent," he said.

The Medium-Term Revenue Strategy aims to raise this to 10.5 per cent by FY2034-35, still far below the 15 per cent benchmark needed for sustained development.

Raising concern over debt servicing, Mr Razzaque warned that interest payments may consume up to 32.5 per cent of NBR's tax revenue in FY2025, leaving less room for essential sectors like health, education, and social protection.

"Greater public investment in these sectors is crucial for employment generation. We must start thinking strategically now," he urged.

He also criticised the slow progress in implementing the government's Smooth Transition Strategy (STS) for LDC graduation. Without structural reforms, the economy may struggle post-graduation-especially with the loss of duty-free access and concessional finance, he warned.

BGMEA Vice President Vidiya Amrit Khan and BKMEA Executive President Fazlee Shamim Ehsan said that workers in the garment sector do not benefit from existing social safety net schemes. They called for dedicated programmes for industrial zones.

Economic Reporters Forum (ERF) President Doulat Akter Mala said the country lacks room for bold reforms-either in budget strategy or LDC graduation.

"We have a lot of policies, but they're only on paper," she said, urging the government to prioritise SMEs, tax automation, and employment generation.

Shawkat Hossain Masum, Head of Online at Prothom Alo, expressed concern that there is little prospect for attracting investment under the current situation.

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