An IMF official said Bangladesh is not facing a crisis and its external position is “very different from several countries in the region”.
After the collapse of the Sri Lankan economy, attention had turned to Bangladesh as the country sought to avoid the economic crisis that erupted in the island nation.
As Dhaka approached the IMF for a bailout package, and amid rise in fuel prices, there were concerns over the country’s economic health. However, a top official from the Washington multilateral lender laid to rest such gloomy projections.
Bangladesh is not in a crisis situation and its external position is “very different from several countries in the region,” said Rahul Anand, division chief in the IMF’s Asia and Pacific Department, according to the country’s premier English daily.
Over reports of country’s $40 billion reserve a pointer of an “impending doom” for Bangladesh, the economist explained, “Even though Bangladesh’s reserves have come down, the stocks are still high enough to cover four to five months of prospective imports”.
There was speculation that the recent record fuel price hike by the government was a precondition set by the IMF. However, the claims were rubbished by the IMF official, who said, “The fuel price hike to bring parity with the global price has no relation to the IMF support programme sought (by Dhaka). Bangladesh’s external debt is relatively low, close to 14 per cent of GDP.”
Sukharanjan Dasgupta, a renowned Bangladeshi author, sees an agenda in this wild alarm. He alleged that some people who are behind the wild projections want to trigger large-scale social unrest to bring down the Sheikh Hasina government that has presided over a Golden Decade of Development.
Bangladesh’s exports in the 2021-2022 fiscal year crossed the $50 billion-mark while the Sheikh Hasina government has set a target of more than $60 billion in export income in the next fiscal (2022-23). The new opening for manpower market in Malaysia and a host of government measures helped the government secure a steady rise in remittances worth $813 million in 10 days of August. In July, $2.09 billion in remittances came in through the banking channel, the highest in last 14 months.
Equating RST funding with an IMF bailout package sought by Sri Lanka or Pakistan is clearly missing the wood for the trees.
“Some misleading reports are causing a false alarm needlessly. Bangladesh is on course to meet all challenges and we are just being careful,” says Ahmed Kaikaus, principal secretary to the Bangladesh Prime Minister.
AUSTERITY MEASURES
Faced with the rise in spot market LNG prices at the outbreak of the ongoing war between Russia and Ukraine, the country rolled out a set of measures, much as precautionary efforts, thanks to the far-sighted leadership of Sheikh Hasina.
Planned power cuts in different parts of the country, alongside putting on hold some future-oriented dev
The country’s junior minister for Power, Mineral and Energy Resources, Nasrul Hamid, has already assured the countrymen of bringing the persistent load shedding to an end from September, with further hints of rolling out adjustments in the prices of oil in accordance with global markets. Importantly, despite the hike in petrol, Bangladesh still ensures cheapest offer for its people and the oil price rise was aimed at trimming down a staggering subsidiary worth over BDT 8000 crore the government paid in the last four months (February 2022—June2022).
HOW SHEIKH HASINA’S LEADERSHIP HELPED BANGLADESH RIDE OUT GLOBAL CRISIS
One reason for this is Sheikh Hasina, an exception to many global leaders, is a cautious development-driven leader who will take no chances with profligate spending.
A Financial Times op-ed this week described Bangladesh’s economic resurgence as a template for third world development, a lesson that can be replicated for a host of African nations . It said Bangladesh is now where South Korea was in 1975, but argued that developing nations better follow the Bangladesh model to wriggle free of hopelessness into growth.
Charlie Robertson, chief economist at Renaissance Capital, told the Financial Times that Bangladesh’s phenomenal growth owed to three factors– literacy, electricity and fertility– adding that this is where the African nations are still behind Bangladesh.
Where Bangladesh differs from Sri Lanka and Pakistan is that in the thirteen years that Sheikh Hasina has led the country, Dhaka has gone big on infrastructure development, but focused only on projects with immediate economic spin-offs.
Compare Sri Lanka’s Hambantota port, which attracted hardly any shipping after being built at huge cost, with the bridge on River Padma which has brought millions immediately once it was opened to traffic. So, while the Rajapaksas had to lease out Hambantota to the Chinese once they failed to pay up, Hasina was courageous enough to scrap the China-proposed Sonadia deep sea port and offered the project to the Japanese at a nearby location.
Be it with multilateral agencies like World Bank or countries like China or Japan, Bangladesh has a track record of driving very hard bargains on terms of repayment and other conditionalities.
“That we are so far ahead of Pakistan in all respects gives us a special cause for happiness. They left us in blood and tears in 1971, but see where they are and where we are,” says a former Bangladesh minister.
If Bangladeshis can take heart about economic safe-being, it is the government’s brilliant management of the Covid pandemic. Hasina’s detractors, like British-born activist David Bergman (married to an Opposition politician’s daughter), predicted “millions of deaths” and a complete breakdown of the health care system. But without any domestic vaccine production capabilities, Bangladesh managed a high vaccination ratio and few deaths, emerging among the top ten performers globally, as evidenced by global rankings.
( Curtesy India Today)