The Global Financial Integrity (GFI) organization published this week its “Trade-Related Illicit Financial Flows (IFFs) in 134 Developing Countries” report which covers the 2009-2018 period. The report states that illicit flows have their origins generally unknown, are unidentified by governments, evade taxes, and are often channeled to finance illegal activities. In this context, the report sheds light on the trade misinvoicing for 134 developing countries using trade data for the last 10 years, a period sufficient to identify mismatches or “value gaps” between what any two countries reported concerning their trades with each other. By looking at the bilateral trade data for each of the 134 developing countries, the GFI covered their trade with a set of 36 advanced economies in addition to their trade with all of their global trading partners during the 2009-2018 period in order to calculate the value gaps. In this vein, the GFI conducted a value gap analysis by examining data submitted by governments to the UN’s database which compares what any set of two trading partners reported about their trade with one another in order to identify value gaps. The report commented that the value gap analysis revealed that trade misinvoicing is a continuous problem across developing countries, resulting in potentially large revenue losses. The report further revealed that the analysis was conducted with the purpose of helping developing countries understand the size of their misinvoicing activity in order to shed light on potentially sizeable revenue losses due to uncollected taxes and duties.

In figures, the analysis conducted by the GFI revealed that the size of value gaps for the 134 developing countries’ trade with 36 advanced economies increased from $551.2 billion in 2009 to $835.0 billion in 2018, averaging $728.38 billion during the studied period. Furthermore, the size of value gaps for the 134 developing countries’ trade with all global trading partners also increased from $934.1 billion in 2009 to $1,626.9 billion in 2018, averaging $1,380 billion during the concerned period.

With respect to Lebanon, the average value gaps in trade with advanced economies was estimated at 20.7% of total trade (equivalent to some $1,759 million), while it amounted to 21.3% of total trade with all global trading partners (equivalent to around $3,363 million).