The Financial Express

Black money crosses Tk 10 trillion in FY21

| Updated: July 13, 2021 22:47:53

Black money crosses Tk 10 trillion in FY21

The estimated amount of black money in Bangladesh stood at Tk 10.18 trillion in the immediate past fiscal year (FY21).

The amount of black money is calculated following a formula provided by a number of economists who have been studying on black money or shadow economy.

They suggested that the size of black economy is around 33 per cent of the country’s nominal Gross Domestic Product (GDP) or GDP at the market price.

Professor Abul Barkat, based on his research, mentioned that the amount of black money in the country is around one third or 33 per cent of the annual GDP at market price.

The GDP at the market price in FY21 stood at Tk 30.87 trillion, according to the provisional estimate of the government.

The GDP at the current price in FY20 was Tk 27.96 trillion and so the estimated amount of black money was Tk 9.22 trillion.

One of the chapters of Prof Barkat’s latest book titled Boro Pordaey Somaj-Orthoniti-Rajniti (On the larger canvas of society-economy-politics), shed light on black money. It also presented a time series data of black money for 48 years (1973-2019) using the formula of 33 per cent nominal GDP.

Professor Abul Barkat, also president of the Bangladesh Economic Association (BEA), has done extensive work on estimating the size of the black or shadow economy in Bangladesh.

A working paper of the International Monetary Fund (IMF), published in 2017, also showed that the average size of the shadow economy of the 158 countries over 1991 to 2015 is 31.9 per cent. It also showed that Bangladesh is listed among 31 countries where the average ratio of the shadow economy is more than 30 per cent of GDP.

Leandro Medina and Dr Friedrich Schneider, authors of the paper, also updated their work, published in 2019, titled ‘Shedding Light on the Shadow Economy: A Global Database and the Interaction with the Official One.’

The paper estimated the amount of black money in different countries until 2017. It also showed that although the amount of black money was 33.1 per cent of GDP on average in Bangladesh during the period, it had started to decline since 2005.

According to the estimate, black money in Bangladesh was 36.1 per cent of GDP in 2003, which came down to 28.6 per cent in 2013 and further declined to 25.90 per cent in 2017.

The black economy is also known as shadow economy, hidden economy, gray economy, underground economy and even cash economy or informal economy. To put it simply, it consists of all economic activities that are hidden from official authorities for monetary, regulatory, and institutional reasons.

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