This chapter identifies and evaluates the institutional causes of the failures of the tax system in Bangladesh. At less than 9%, Bangladesh is among the countries with the lowest overall average ratio of tax revenue to GDP. It follows that its fiscal space, that is the capacity to spend on public goods and correct rising income inequality, is extremely limited. The low average tax ratio results from both low nominal tax rates and a low rate of tax collection, itself due to pervasive tax evasion (often with the paid support of tax collection personnel) or to tax exemptions generously granted by the Government to its supporters. In addition, albeit in a limited way, taxation distorts economic incentives, either directly through non-uniform tax rates that favour some sectors or firms and penalise others, or indirectly through exemptions and evasion. This chapter also explores the reasons behind the difficulties that have surrounded previous attempts at tax reforms, and the underlying political economy factors. It, finally, lists the most attractive reforms in terms of increasing tax revenues, the effectiveness of tax collection, and the redistributive impact of the tax system.

This chapter identifies and evaluates the institutional causes of the failures of the tax system in Bangladesh. At less than 9%, Bangladesh is among the countries with the lowest overall average ratio of tax revenue to GDP. It follows that its fiscal space, that is the capacity to spend on public goods and correct rising income inequality, is extremely limited. The low average tax ratio results from both low nominal tax rates and a low rate of tax collection, itself due to pervasive tax evasion (often with the paid support of tax collection personnel) or to tax exemptions generously granted by the Government to its supporters. In addition, albeit in a limited way, taxation distorts economic incentives, either directly through non-uniform tax rates that favour some sectors or firms and penalise others, or indirectly through exemptions and evasion. This chapter also explores the reasons behind the difficulties that have surrounded previous attempts at tax reforms, and the underlying political economy factors. It, finally, lists the most attractive reforms in terms of increasing tax revenues, the effectiveness of tax collection, and the redistributive impact of the tax system.

This chapter provides an analysis of the structure of the banking sector in Bangladesh, different performance indicators of the banking sector, the trend in NPLs, and efficiency levels of private banks. It also explores the politics of the banking sector and avenues of governance failures in relation to private commercial banks in Bangladesh. This poor performance of the banking sector is related to the low quality of the sector’s lending operations. Through regulatory and policy capture, political patronage often leads to unproductive loans, or simply loans that bankers know will never be repaid. Also, cases of embezzlement through legal insider lending – that is to the bank’s owners or their family – have been reported. NPLs, and the frequent need for monetary injection in state-owned banks or bailouts of private banks, are the manifestation of these governance failures of the whole sector. This chapter emphasises key reforms needed in the governance of the sector which include autonomy of the central bank, modification of the Banking Companies Act and strict adherence to it, and political commitment to penalise loan defaulters.

This chapter provides an analysis of the structure of the banking sector in Bangladesh, different performance indicators of the banking sector, the trend in NPLs, and efficiency levels of private banks. It also explores the politics of the banking sector and avenues of governance failures in relation to private commercial banks in Bangladesh. This poor performance of the banking sector is related to the low quality of the sector’s lending operations. Through regulatory and policy capture, political patronage often leads to unproductive loans, or simply loans that bankers know will never be repaid. Also, cases of embezzlement through legal insider lending – that is to the bank’s owners or their family – have been reported. NPLs, and the frequent need for monetary injection in state-owned banks or bailouts of private banks, are the manifestation of these governance failures of the whole sector. This chapter emphasises key reforms needed in the governance of the sector which include autonomy of the central bank, modification of the Banking Companies Act and strict adherence to it, and political commitment to penalise loan defaulters.

We review evidence on the institutional weaknesses underlying economic development problems in Benin, analysing various sources of information including cross-country databases and an original opinion survey among decision makers in Benin. Three pressing institutional issues are found. First, the most serious impediment is corruption, which is seen as responsible for several key dysfunctions in almost all sectors: the political and electoral systems (vote buying), the relationship between business and the public administration (rigged procurement) or the judiciary system, land rights, or complicity between politicians and the media. Second, weak public management deteriorates the quality and the delivery of public services. It is most characterised by opacity of government policy-making to the public, ineffective regulation of the power sector, and a complex tax administration grossly inefficient in tax collection. Third, the level of informality is much higher in Benin than in the average sub-Saharan African country. This generates several economic costs including tax revenue loss, job precariousness, unfair competition for formal firms, and lack of control over the economy.