Even before the COVID-19 pandemic, Bangladesh’s economy faced a significant downturn. The pandemic in 2020 further exacerbated the situation, pushing the economy into deeper distress. The global recession of 2022 added to these woes, severely impacting the country. Amid this crisis, a severe dollar shortage devalued the local currency, which had a ripple effect across the economy. This negative impact continues to persist, further aggravated by the rising trend of capital flight from the country.

In the last fiscal year alone, net capital legally transferred abroad saw a staggering increase of 60%, marking the highest in five years. Official figures reveal that approximately $20 million USD (equivalent to 2.4 billion Bangladeshi Taka) were legally sent abroad, while unofficial channels likely facilitated the transfer of significantly larger sums.

A recent report by the Economic White Paper Committee highlighted that over the past 15 years, an estimated $16 billion USD was illicitly siphoned out of the country annually. Though historically foreign investments were restricted, the previous government began granting limited approvals for investments abroad. Most of these legal transfers were for the financial sector and a few industrial setups. However, legal transfers constituted only a small fraction of the overall outflows, with vast sums illicitly moved to establish businesses overseas.

Prominent business families associated with influential groups, such as Beximco Group, S. Alam Group, and Summit Group, have been named in reports for setting up enterprises abroad. These include sectors like financial institutions, minerals, and textiles.

Data from the Bangladesh Bank indicates that in the fiscal year 2023-24, approximately $20 million USD was transferred legally, a sharp rise compared to previous years. However, the gross foreign investment originating from Bangladesh in that year rose to $81.5 million USD, marking a 17.28% increase. Meanwhile, direct foreign investments in Bangladesh have been steadily declining over the past three fiscal years.

In the fiscal year 2022-23, Bangladesh witnessed a significant legal outflow of capital, primarily to countries such as India, which received $3.15 million USD, followed by the UAE with $1.08 million USD, and Ireland with $130,000 USD. Investments abroad were concentrated in financial institutions ($7.01 million USD) and the minerals sector ($940,000 USD), alongside smaller amounts in textiles, services, and trade sectors.

While legal capital outflows have surged, loan repayments have also increased. For instance, in the fiscal year 2023-24, $3.24 million USD was allocated to settling previous debts. Despite this, the balance of Bangladesh’s foreign investments dropped by 3.65%, underscoring the ongoing challenges in stabilizing the country’s economic standing amid persistent capital flight.