Sri Lanka, a South Asian island country, is confronted with the prospect of experiencing the worst economic slump in its history. Sri Lanka’s economy has come to a grinding halt. In addition, the amenities for the general public are being closed. As a result of political and administrative issues, Sri Lanka is going through a challenging period.
The collapse of the tourism industry, the country’s main source of income for the last two years, is one of the explanations provided by many international media outlets and economic analysts for the disaster in Sri Lanka. As a result, Sri Lanka’s income from this sector has been severely harmed. On the other hand, the large foreign loan instalments acquired earlier in various projects to attract tourists must be returned. Furthermore, industrial production has plummeted, as have export profits and remittances. The country is in an all-time economic crisis, even though taxes and VAT have been cut and pesticide use in agriculture has been cut to zero.
On the other hand, Pakistan’s fragile economy (high inflation and low growth) is one of the hot spots in South Asia now. This issue is creating some sort of political problem in Pakistan now.
The Asian Development Bank (ADB) has said that Bangladesh will not face the same economic crisis as Sri Lanka. Edmin Ginting, the agency’s resident representative in Bangladesh, said Bangladesh’s macroeconomic management is very good. In addition, the debt-to-GDP ratio is in a tolerable position. So, there is no reason to fear. Bangladesh is in a better position than Sri Lanka. Bangladesh will not be in a crisis like Sri Lanka.
He made the remarks in response to a question from reporters at the launch of the ADB report, “Asian Development Outlook,” on Wednesday. Ginting said Bangladesh’s debt management is very good. Sri Lanka did not have that. That is why the country is in crisis. Overall, it can be said that things like Sri Lanka will not happen in Bangladesh.
However, Edmin Ginting advised Bangladesh to be careful on two issues. These include strengthening debt management policies and increasing internal revenue collection. Economists say there is no comparison between the economies of Bangladesh and Sri Lanka.
Prime Minister Sheikh Hasina said Bangladesh is keenly aware of the Sri Lankan economic catastrophe. She said that since the government’s creation, all development loans had been paid back on schedule. Bangladesh has never defaulted on a loan. Our economy is built on a solid basis. That’s my point. “We are cautious.”
The economies of Bangladesh and Sri Lanka differ. Bangladesh’s remittances (expat income) are growing, as are its reserves. The money generated by exporting well-known Made in Bangladesh items to other nations worldwide is also expanding. Despite the coronavirus outbreak, Bangladesh’s economy has improved. Overall, Bangladesh’s economy is improving. No economic calamity like Sri Lanka is imminent in Bangladesh.
Food production is not scarce in Bangladesh. The country’s key food imports are not all imported. Remittances and export profits are growing daily. Bangladesh has 44.40 billion dollars in reserves. Sri Lanka, on the other hand, has under $2 billion in reserves. Also, Bangladesh’s per capita debt is 292.11, whereas Sri Lanka’s is 1650.
Such suspicions are unfounded. Bangladesh is on track. No reason to be Sri Lankan. In June, the Padma Bridge will open. The Metrorail, Bangabandhu Tunnel, and other special economic zones will all be launched this year. These initiatives will offer a new dimension to Bangladesh’s growth. If these projects are completed, the benefits will be immediate. The country’s investment will grow. There will be work. GDP will expand.
Bangladesh has plenty of food stocks. Storage in government warehouses is more than at any time in the past, at about 2 million tons. Due to bumper yields in the last 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 per cent, 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. Padma Bridge, Karnafuli Tunnel, Metrorail, Dhaka Elevated Expressway, Rooppur Nuclear Power Plant, Rampal Coal Power Plant, Matarbari Coal Power Plant, Payra Seaport, Deep Seaport, LNG Terminal. Economists think that if these projects are launched, good returns will come.
At present, the foreign debt balance of Bangladesh is 49.45 billion dollars. 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 299,112 dollars. 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, while the GDP has gradually fallen. In 2019, foreign debt reached 42.6 per cent of GDP. In Bangladesh, it is less than 13 per cent.
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, which includes nearly 25 lakh of the 42.2 lakh female workforce,
Bangladesh outpaces Pakistan across all standard economic indicators, including nominal gross domestic product, GDP per capita, GDP 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 US dollars. In January, remittances to Bangladesh reached nearly 17 billion US dollars, and in March, remittances reached 18.6 billion USD. 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 has collapsed in Corona.
Bangladesh earned $4.76 billion in exports in March. 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 dollars.
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 USD, as against Bangladesh’s 416 billion USD. On the other hand, Bangladesh has a lot of people who work, a lot of big projects that have been done well, and more money for expatriates.
Sri Lanka’s inflation was at 16 per cent a few days ago. It is gradually increasing. Bangladesh’s inflation is 6 per cent. That means BD’s economic management is much more integrated. Sri Lanka’s GDP fell 3.6 per cent. GDP has increased by 3.51 per cent in that country. On the other hand, Bangladesh has very strong leadership, a pragmatic fiscal policy, and a foreign reserve. The Sri Lankan case is totally different from Bangladesh. So, Bangladesh needn’t worry about such an economic collapse. Bangladesh must be cautious in this regard.
(Mehjabin Bhanu graduated from the Department of Political Science, University of Rajshahi)