Bangladesh has no reason to suffer crisis like Sri Lanka

The island nation of Sri Lanka is going through the worst economic recession in its history. The country’s economy has collapsed. All civic facilities have been nearly closed. The country is also facing many difficult problems including political and administrative crisis.

According to the international media reports and economic analysts, this situation has created in Sri Lanka due to the collapse in the tourism sector, the country's main source of income, for last two years. As a result, the country is suffering a major blow.  On the other hand, the country took huge foreign loans to implement various projects with a view to attracting tourists. Huge foreign loan installments have created an additional pressure. Moreover, industrial production has collapsed, export and remittance earnings have reached the bottom. Due to reduction of taxes and VAT and reduction of chemical use in agriculture, the country is facing a production deficit and some other problems.

People protest in Sri Lanka (Photo: AFP)

Through the social media, opposition leaders are also raising a doubt whether Bangladesh will be like Sri Lanka.  On April 2, at a pre-budget discussion organized by the Institute of Chartered Accountants of Bangladesh (ICAB) and the Economic Reporters Forum (ERF), Ahsan H. Mansoor, Executive Director of Policy Research Institute (PRI), said: “If the investment in mega projects does not return, Bangladesh will also become Sri Lanka”. Indian media also published several reports comparing Bangladesh with Sri Lanka.

However, economists said fear about Bangladesh is just like a rumor. They asked people not to listen to the rumor. They said the economies of Bangladesh and Sri Lanka are different. Remittance earnings are increasing in Bangladesh, and it has a record amount of reserves. Moreover, export of ‘made in Bangladesh products’ to different countries of the world is increasing day by day.  The global economy faced the real hardship during Covid-19 pandemic. But Bangladesh economy showed a positive trend and kept its pace on right track despite the hard times. All the indicators of the Bangladesh economy are in a positive trend. So, Bangladesh will not face such problems which are being faced by Sri Lanka. Economists said this while talking to the correspondent.

The economic nature of Bangladesh and Sri Lanka

There is no shortage of food production in Bangladesh. The country’s staple food is not dependent on imports. The amount of remittances and export income of Bangladesh is increasing day by day. The country has a foreign exchange reserve of $44.40 billion. In contrast, Sri Lanka has a reserve of less than $2 billion. Moreover, the per capita debt of Bangladesh is $292.11 while of Sri Lanka $1,650.

About the rumors or fears that are being spread over Bangladesh after the crisis emerges in Sri Lanka’s economy, noted economist AB Mirza Azizul Islam told media that such fears are baseless as Bangladesh is on the right track. There is no reason for Bangladesh to be like Sri Lanka. These are certainly silly conversations, unreasonable and unrealistic.

Regarding the future prospect of Bangladesh, he said, “The Padma Bridge are likely to be inaugurated 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. I believe we will not have to look back once the projects get run.”

He further said, “In my opinion, none of the mega projects Bangladesh is implementing are unnecessary; Everything is important and necessary. Bangladesh will get the return immediately once these projects are implemented, helping to increase both investment and employment in the country and GDP growth will also get boosted.”

Citing the example of Bangabandhu Jamuna Bridge, he said, “We can now realize at every moment what momentum this bridge has given to the country’s economy. I think the projects currently going on including the Padma Bridge, the country will get a similar return once these are implemented.

Monzur Hossain, senior director at Bangladesh Institute of Development Studies (BIDS), told media that some people are unnecessarily thinking negatively. There is no reason behind their fears. There is no reason for Bangladesh to embrace the situation like Sri Lanka.”

He further said, “The most comfort zone is that Bangladesh has a plenty of food stocks. The storage, nearly 20 lakh tons, in government warehouses is more than at any time in the past. Due to bumper yields in recent years, people also have ample stocks of paddy and rice as well. So Bangladesh needs no headache over food for one or two years. There is no reason for Bangladesh to go up the inflation to 20 percent like in Sri Lanka.”

Professor Anu Muhammad, Department of Economics at Jahangirnagar University (JU) told risingbd that Sri Lanka’s per capita income is higher than that of Bangladesh, India and Pakistan. Although the ‘role model’ claims and festival news about the increase in GDP and per capita income like Bangladesh is not heard, Bangladesh has a per capita income of $2590 (as new) while Sri Lanka has $3830. The unforeseen policy, the increase in commercial debt dependence, the reckless mega projects, the widespread corruption led by one family, as well as the unfavorable international situation have put the Sri Lankan economy on streets. The high per capita GDP in South Asia has not been able to save the country. On the contrary, the process by which GDP has been increased and ‘development’ has been shown by hiding information has turned into a curse. However, the disaster that happened in Sri Lanka’s economy is not likely to be in Bangladesh.

Nazneen Ahmed, Country Economist to Bangladesh of the United Nations Development Programme (UNDP), told risingbd that she does not understand the issue of those are worried about Bangladesh after the catastrophe of Sri Lankan economy. This is certainly a rumor. It is better not to pay heed to the rumors. All the indicators of the economy Bangladesh reserves are positive. On the contrary, all the indicators which Sri Lanka had were negative. So I do not think it’s right to compare Bangladesh with Sri Lanka.

The Padma Bridge (File photo)

Mentionable mega projects in Bangladesh

The Padma Bridge, Bangabandhu Sheikh Mujibur Rahman Tunnel (or Karnaphuli Tunnel), Metrorail, Dhaka Elevated Expressway, Ruppur Nuclear Power Plant, Rampal Coal Power Station, Matarbari Coal Power Station, Payra Seaport, Deep Seaport and LNG Terminal are among the mentionable mega projects. The economists believe that a good return will come once these projects are launched.

The foreign debt figure

Bangladesh has currently a foreign debt of $4,945.80 crore ($49.45 billion). According to the Bureau of Statistics, the total population of the country is 16.93 crore. As a result, the per capita foreign debt is $292.11. On the contrary, Sri Lanka, a country of two crore population, has a total foreign debt of $3,300 crore. As such, the per capita debt is $1,650 in the island state. The per capita debt of the people of Sri Lanka is 5.5 times higher than that of Bangladesh. The country’s GDP has gradually fallen as the debt burden started to increase since 2014. In 2019, Sri Lanka’s foreign debt reached at 42.8 percent of its GDP, which Bangladesh has currently less than 13 percent.

The Remittance

In January this year, Sri Lanka’s remittance inflow was only 27.10 crore US dollars. On the contrary, Bangladesh earned 170.44 crore US dollars in January and while 186 crore US dollars in March this year. Even during the coronavirus epidemic in the last fiscal year of 2020-21, Bangladesh achieved a record amount of remittance of 24.78 billion US dollars. Sri Lanka counts calendar year as the fiscal year. In 2021, the country earned a remittance of nearly 8 billion US dollars which means Sri Lanka’s expatriate income has collapsed during the coronavirus outbreak.

The export Income

In March this year, Bangladesh earned 4.76 billion US dollars from exports while Sri Lanka achieved 1.1 billion dollars from the sector in January. Although Sri Lanka’s export earning has collapsed, the opposite has happened to Bangladesh.

The reserve

Bangladesh has currently a reserve of 44.40 billion US dollars (with what is possible to cover six months of import costs) while Sri Lanka has a reserve of less than 2 billion US dollars. At the end of January, Sri Lanka had a reserve of 2.36 billion US dollars and at the end of last December, it was 3.1 billion US dollars. In April last year, Sri Lanka had a reserve of 4.47 billion US dollars. At that time, Bangladesh’s reserve was over 46 billion US dollars.