White Paper: Mega project costs increased by 70% due to corruption under AL rule

According to the white paper on the state of the economy, corruption in large-scale public projects has resulted in an average cost increase of 70% and delays of over five years. 

Of the $60 billion invested in ADP and development projects over the past 15 years, $14–24 billion (1.61–2.80 lakh crore BDT) has been lost due to political extortion, bribery, and inflated budgets. 

The report, submitted to Chief Adviser Prof. Muhammad Yunus by Dr. Debopriya Bhattacharya, head of the white paper committee, on Sunday, highlights how the misappropriation of funds during land acquisitions and the appointment of politically favored project directors have further drained resources, undermining the potential benefits of infrastructure and social investments. 

Dr. Bhattacharya presented the paper to the media at the NEC room in the Planning Commission on Monday. The paper notes that systemic tax evasion, the misuse of exemptions, and poorly managed public finances have deprived the state of vital resources, hindering development. 

From 2009 to 2023, illicit financial outflows averaged $16 billion annually, more than double the combined value of net foreign aid and FDI inflows. Reducing tax exemptions could double education funding and triple health allocations, highlighting the significant fiscal losses due to corruption. 

The paper also points out that manipulated domestic production figures and understated demand for key commodities like rice, edible oil, and wheat have destabilized markets. Erratic and politically driven procurement policies have benefitted powerful business groups while worsening hardships for consumers. A lack of robust stock monitoring has only intensified these market distortions.

In the banking and financial sectors, politically influenced lending practices have deepened the ongoing banking crisis. As of June 2024, distressed assets were equivalent to the cost of building 14 Dhaka Metro systems or 24 Padma Bridges. Persistent loan defaults and high-profile scams have eroded financial stability and diverted capital from productive sectors.

Over the past decade, BDT 13.4 lakh crore (BDT 1.34 trillion) has been funneled through hundi transactions by recruitment agencies for visa purchases, four times the cost of constructing Dhaka MRT 06 (Uttara-Motijheel). Exploitative recruitment practices have deprived migrant workers of fair employment opportunities, reducing remittance contributions to the economy.

Misallocations within social safety net programs have left millions vulnerable. As of 2022, 73% of social safety net beneficiaries were classified as non-poor, a significant increase from 66% in 2016. More than 20 million people remain just two days of lost work away from falling into poverty, highlighting the systemic inequities exacerbated by corruption.

In the environmental sector, corruption in climate adaptation funding has worsened environmental degradation. Politically favored mismanagement of climate resources has undermined sustainability initiatives, threatening long-term resilience to climate-induced risks.