Renowned economist AB Mirza Azizul Islam said that the fears being raised about Bangladesh after the economic crisis in Sri Lanka are unreasonable and unrealistic.
He said, “There is no basis for such fears. Bangladesh is on the right track. There is no reason for Bangladesh to be in fear of Sri Lanka’s situation.”
Sri Lanka is going through the worst economic recession in history. As the economy of the country of 20 million people collapses, not only is the repayment of their foreign loans in uncertainty, but also the services to the citizens are being cut off. The economic crisis led to political crisis.
Bangladeshi economists say that considering media reports and economic analysts pointing out the causes of the nation's catastrophe, it is clear that the risks are not the same in the case of Bangladesh.
Media articles are analysing whether the fate of Bangladesh will be like that of Sri Lanka. The Indian media is also publishing reports comparing Bangladesh with Sri Lanka.
However, Mirza Azizul, finance adviser to the former caretaker government, and Monzur Hossain, a senior research director at BIDS, dismissed the fears.
“There is no comparison between the economies of Bangladesh and Sri Lanka. The nature of the two is different. There is no shortage of production here. Besides, export earnings and remittances are not affected,” said Mirza Azizul.
The main food product is also not dependent on imports. Bangladesh's foreign debt is not as high as Sri Lanka's per capita. Repayment of foreign loan instalments is not creating any pressure in the case of Bangladesh. The country's reserves are also very high compared to Sri Lanka, he added.
Monzur Hossain, senior director of the Bangladesh Institute of Development Studies (BIDS), said "Some people are thinking negatively. There is no reason for these thoughts. There is no reason for Bangladesh to be like Sri Lanka.”
Instead of fear, Mirza Aziz is optimistic about Bangladesh. He said, "The Padma Bridge will be launched in June, the Metro rail, Karnafuli Tunnel and some other special economic zones will also be launched this year. The launch of these projects will add a new dimension to the development of Bangladesh. I don't think we have to look back."
Sri Lanka has borrowed from various sources to implement such projects, but despite spending huge sums of money, many projects have not been economically viable.
“In my opinion, the big or mega projects in Bangladesh -- Padma Bridge, Karnafuli Tunnel, Metro Rail, Dhaka Elevated Expressway, Rooppur Nuclear Power Plant, Rampal Coal Power Plant, Matarbari Coal Power Plant, Payra Seaport -- are not unnecessary; everything is important and necessary. No analyst has said that these projects are unnecessary and will not be profitable. Rather, the projects are expected to make people's lives easier and better,” said Mirza Aziz.
The Bangladeshi economists further said the biggest issue in Sri Lanka's economic collapse is foreign debt. The country has borrowed heavily for various mega projects, which have not been profitable.
At present, Bangladesh's external debt is 49.45 billion US dollars. According to Bangladesh Bureau of Statistics, the per capita foreign debt stands at 292.11 dollars as the total population of the country is 169.3 million.
The per capita debt of the people of Sri Lanka is more than 5.5 times the debt of Bangladesh.
Bangladesh government has repeatedly dismissed the fears of being entangled in debt trap and so did China, one of Bangladesh’s major lenders whose lending is on the surge.
Chinese diplomats in Dhaka said on several occasions that there is no chance for Bangladesh to face any problem with Chinese loans as they bear low interests and they are being used in used in much-needed projects.
Mirza Azizul said, "The most important thing is that the World Bank, ADB, IDB, JICA and other development agencies have added loans and their own money to all projects in Bangladesh, big and small.”
The interest rates of these entities are very low and can be repaid over many years. Some of the loans, however, are later given as grants to other projects. This is especially true for most JICA loans, he added.
He said, “Sri Lanka, on the other hand, has implemented large-scale projects with China in the form of supplier credit (purchasing goods from the lending country). They have also implemented many projects that are not necessary. The interest rate of these projects is much higher. Sri Lanka is now in danger of repaying those loans at interest.”
It was informed that in the last financial year, the growth of exports was more than 17 percent. In the 9 months of the current financial year (July-March), the growth doubled to 33.41 percent. The remittances sent by the expatriates came down from the last financial year’s figure but was more than the previous years. On the contrary, Sri Lanka's export earnings have plummeted. The condition of remittances is also miserable.
Bangladesh Export Promotion Bureau (EPB) on Monday released data on export earnings for the month of March. It shows that Bangladesh earned 4.76 billion dollars from the export of goods this month. In January, Sri Lanka earned 1.1 billion from exports.
Sri Lanka's expatriate income during the pandemic has declined drastically. On the other hand, remittance flow in Bangladesh has increased significantly during this period.
Around the beginning of the week, Bangladesh's reserves were 44.40 billion, and Sri Lanka's reserves are less than 2 billion. At the end of January, Sri Lanka's reserves stood at 2.36 billion. At the end of December it was 3.1 billion dollars.
After coming to power in 2019, Sri Lankan President Gotabaya Rajapaksa introduced organic farming in the country. He also banned the use of chemical fertilisers and pesticides in agriculture.
This has a negative impact on the country. Rice production reduced by up to 20 percent. Sri Lanka, which was self-sufficient in rice production, was then forced to import about half a billion dollars’ worth of rice fuelling price spirals.
On the other hand, Bangladesh is self-sufficient in rice production and production is increasing year by year. Food stocks in Bangladesh are at an all-time high, after the government allowed private rice imports.