By: Mehjabin Bhanu
Sri Lanka is facing the worst economic recession in its history. Its economy has collapsed and the country is going through a difficult time amid political and administrative crises.
The collapse of the tourism industry is one of the reasons most analysts feel has led to the disaster in Sri Lanka. As a result, income from tourism has been severely harmed. The large foreign loans acquired in various projects to attract tourists must be returned. Also, industrial production has plummeted, as have exports and foreign remittances.
On the other hand, Pakistan’s fragile economy (high inflation and low growth) is one of the hot points in South Asia now.
The Asian Development Bank (ADB) has said that Bangladesh will not face the same economic crisis as Sri Lanka. Edimon Ginting, the agency’s country director in Bangladesh, reportedly said Dhaka’s macroeconomic management is very good. In addition, the debt-to-GDP ratio is in a tolerable position.
ADB praise
Ginting made the remarks at the launch of the Asian Development Outlook on Wednesday. He said Bangladesh’s debt management was very good. Sri Lanka did not have that. That is why the country is in crisis. Overall, it can be said that a Sri Lanka-like crisis will not happen in Bangladesh.
However, Ginting advised Bangladesh to be careful on two issues. These include strengthening debt management policies and increasing internal revenue collection.
Prime Minister Sheikh Hasina said Bangladesh is very alert to the economic crisis in Sri Lanka. She said that since the formation of her government, Dhaka has repaid all the loans we have taken for development on time. Bangladesh has never defaulted on its loans. “The foundation of our economy is very strong. That’s what I want to say. We are very careful. “
Bangladesh’s inward remittances are rising, and the country’s foreign reserves are at an all-time high. In addition, the money created by the export of Made in Bangladesh products is continuously increasing. Bangladesh’s economy has improved even amid the Corona pandemic. Overall, all of Bangladesh’s economic indicators are improving.
Food aplenty
In Bangladesh, there is no scarcity of food production. The country’s primary food imports are not entirely reliant on imported goods. Bangladesh has $44.40 billion in foreign exchange reserves. Sri Lanka, on the other hand, has reserves of less than $2 billion dollars.
The Padma Bridge will be launched in June. Metrorail, Bangabandhu 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.
Bangladesh has plenty of food stocks. Storage in government warehouses is more than at any time in the past, about 2 million tonnes. Due to bumper yields in a few years, people also have ample stocks of paddy and rice. So, Bangladesh does not have to think about food for one or two years. There is no reason for inflation to rise to 20 percent like in Sri Lanka.
All the indicators of the economy of Bangladesh are positive. On the contrary, all the indicators in Sri Lanka were negative. So, it is not right to compare Bangladesh with Sri Lanka.
Foreign debt
At present, the foreign debt balance of Bangladesh is $49.45 billion. According to the Bureau of Statistics, the total population of the country is 169.3 million. As a result, the per capita foreign debt is $292.11. Sri Lanka, a country of 20 million people, has a total foreign debt of 3.3 billion. As such, the per capita debt is 1,650 USD. The per capita debt of the people of Sri Lanka is 5.5 times more than that of Bangladesh.
Since 2014, the debt burden has started to increase and the GDP has gradually fallen. In 2019, foreign debt reached 42.6 percent of GDP, in Bangladesh it is less than 13 percent.
A GDP of $411 billion, compared to Pakistan’s GDP of $347 billion, makes Bangladesh the 33rd largest economy in the world. Experts forecast that the economy’s size could double by 2030. The garment industry includes nearly 25 lakh of the 42.2 lakh females in the workforce.
Bangladesh outpaces Pakistan across all standard economic indicators, including nominal gross domestic product, GDP per capita, GDP’s growth rate and foreign reserves. It has now become one of the world’s fastest-growing economies.
Last January, Sri Lanka’s remittance income was only $271 million. In January, remittances in Bangladesh reached nearly $17 billion and in March, remittances reached $18.6 billion. In the last fiscal year 2020-21, a record number of remittances of 24.7 billion came to Bangladesh even during the Corona epidemic. The Sri Lankan calendar year is a financial year. In 2021, remittances to the country reached about 8 billion. In other words, Sri Lankan expatriate income collapsed in Corona.
Foreign earnings
In March, Bangladesh earned $4.76 billion from exports. In January, Sri Lanka earned $1.1 billion from exports. Although Sri Lanka’s export earnings have plummeted, the opposite has happened in Bangladesh.
Bangladesh’s existing reserves are $46 billion (with these reserves it is possible to cover six months of import costs). 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 last December, it was $3.1 billion.
In April last year, Sri Lanka’s reserves stood at $4.47 billion. At that time Bangladesh’s reserves were over $46 billion. Besides, Sri Lanka’s GDP is only $83 billion as against Bangladesh’s $416 billion. On the other hand, a large working population, successful implementation of big projects, and an increase in expatriate income are the major strengths of Bangladesh.
Sri Lanka’s inflation was 16 percent a few days ago. It is gradually increasing. Bangladesh’s inflation is 6 percent. That means Dhaka’s economic management is much more integrated.
Bangladesh has very strong leadership, pragmatic fiscal policy and foreign reserves. So, it need not worry about an economic collapse, like some South Asian nations.
The writer is a school teacher in Bangladesh and can be reached at mehjabinbhanu1579@gmail.com
