‘Bangladesh’s economic stability during global inflation and world appreciation

Samina Akhter

Due to the Ukraine-Russia war after the corona epidemic, the whole world is suffering from economic recession. In various countries of the world, the value of the currency is falling, inflation is increasing. One country after another is going bankrupt. At that time, Bangladesh is slowly taking steps to understand the situation. After overcoming the crisis, Sheikh Hasina’s country is running on a positive trend in the economy. And the media of different countries of the world are praising this. World media is talking about Sheikh Hasina and her country.

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According to a report in Thailand’s Bangkok Post, Bangladesh will not have a crisis like Sri Lanka. According to a report in the Financial Times of India, the economy of Bangladesh is stable even in the global recession. On the other hand, the report of The Express Tribune of Pakistan said to Pakistanis, to learn from Sheikh Hasina. He is the pride of Bangladesh.

The highlights of these reports are as follows:

The crisis will not be like Sri Lanka: Although Bangladesh is under economic pressure, there is absolutely no danger of a situation like Sri Lanka. Karnataka-based researcher and analyst John Rosario also gave this opinion in an analysis. John Rosario compared the economy of Bangladesh and Sri Lanka in a report of ‘Bangkok Post’ published from Thailand.

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Sri Lanka’s economic and political disaster has been in the news for the past few months. Amidst these discussions, analysts are looking for signs of a simultaneous crisis in developing economies. Some countries with economies like Bangladesh are compared to others, which may experience a debt crisis or bad situation. Visual Capitalist recently published a list of 25 countries at risk of debt, based on data from Bloomberg. Russia, Zambia, Suriname, Lebanon and some countries are already behind in debt repayment.

Belarus is at risk of bankruptcy. 12 other countries are on the list for inflation, debt and high borrowing costs. These are Argentina, Ukraine, Tunisia, Ghana, Egypt, Kenya, Ethiopia, El Salvador, Pakistan, Belarus and Ecuador. Bangladesh is not on this list.

Because the visionary and dynamic leadership of Bangladesh Prime Minister Sheikh Hasina is challenging. But authorities have taken steps to keep the economy on an even keel. Foreign travel by government officials has been restricted, the currency has been devalued against the US dollar, cash gifts are being given in remittances from abroad, and luxury goods have been taxed. These initiatives have been taken to build the country’s foreign exchange reserves. As a result, the import demand can be easily met. Meanwhile, the government has adopted a policy of increasing exports and reducing imports to help the economy recover.

The impact of the Covid-19 pandemic on the economy, which has been exacerbated by the Russia-Ukraine war, cannot be denied. Along with the global crisis, the situation of developing countries like Bangladesh has become more difficult due to the Russia-Ukraine war.

To help revive the economy, the country must give equal priority to improving the export-import ratio and controlling inflation. However, there are sufficient foreign reserves to cover import expenditure for at least three months. Depletion of reserves could be a cause for concern if economic conditions further weaken. Strategic interventions at all levels of budget management are required as part of a comprehensive plan to control and revive the economy. Prime Minister Sheikh Hasina has been emphasizing on cost reduction.

Advising Ministers and Departments on how development projects can be carried out without the cost of going abroad. He is advising the countrymen to save energy and electricity, so that no crisis occurs in the country. To reduce the pressure on the economy, he emphasized on the implementation of only important projects and the postponement of less important projects. The development cooperation organizations of Bangladesh have repeatedly said that there is no logical reason to compare the situation of Bangladesh with Sri Lanka.

Firstly, Sri Lanka’s economy is mainly dependent on tourism. Due to the epidemic, this sector collapsed. As a result, the country’s reserves began to decrease. The Russia-Ukraine war has caused the reserves to drop sharply due to the increase in the price of imported fuel and consumer goods. Important imports are suspended almost simultaneously. Public outrage and outrage erupted and President Gotabaya Rajapaksa resigned.

In contrast, the mainstays of Bangladesh’s economy are garments and remittances from Bangladeshi workers sent abroad. The country’s foreign exchange reserves are much stronger than other South Asian countries.

At the beginning of the pandemic, many feared that remittance flows would decrease as many expatriates lost their jobs. Although the success of the government’s diplomatic efforts has seen many Bangladeshis return to work abroad and remit at pre-pandemic rates, another major cause of public anger in Sri Lanka has been widespread corruption by key members of the ruling Rajapaksa family. Corruption is an issue in Bangladesh too, so far no such allegations have been made against the Prime Minister and his family members. As a result, it can be said with certainty that there is absolutely no possibility of a Sri Lanka-like situation in Bangladesh in the near future.

Looking at the progress of the country after the pandemic, it is known that the government and Bangladesh Bank have already undertaken some financial reform programs. Still, there are some short-term challenges.

A common perception in economics is that a country’s external debt of 70 percent of its gross domestic product (GDP) is manageable and the risk of economic distress is low. Bangladesh’s foreign debt is 44 percent of GDP. Bangladesh is still the world’s 41st largest economy despite a 21.8 percent increase in external debt, a 44 percent increase in import spending amid a global downturn, and dwindling reserves. Among the world’s 50 largest economies, only Bangladesh and India are in South Asia.

Economy stable despite global recession: The entire world is suffering from economic recession in the context of the Corona pandemic and the Russia-Ukraine war. Which has an impact on South Asian countries as well. In the meantime, Sri Lanka has declared itself bankrupt, foreign exchange reserves have decreased alarmingly in Pakistan as well. Bangladesh has kept its economy stable even in such regional geo-economic conditions. Economic Times reported this information in a report on Monday. The report written by Dipanjan Roy Chowdhury, the diplomatic editor of this Indian media, said that Bangladesh has established itself during the long 50 years of independence. The extensive manufacturing sector and infrastructural development; All in all, the economy of Bangladesh is the most followed in Asia.

“Bottomless Basket” – After the Great War of Liberation, the US Secretary of State Henry Kissinger’s blasphemous words about Bangladesh are mentioned in the report and it is further said that Bangladesh has come a long way from that place. The recently inaugurated Padma Bridge stands proudly as proof of this. The international organizations which refused to finance this bridge are now congratulating Bangladesh. The report also mentions that the foundation of the economy of Bangladesh has become very strong due to this bridge.

Bangladesh itself has given itself a roadmap for development. The roadmap, called Vision-2041, aims to end extreme poverty and rise to the status of an upper-middle income country by 2031. And through this, the goal of Bangladesh is to become a developed country by 2041. Besides, Bangladesh is making progress in various social and economic fields in South Asia.

Bangladesh’s industrial base is steadily diversifying from agriculture to pharmaceuticals and shipbuilding to garments, and the country’s exports are growing.

Economics Time also noted that the government’s policy of increasing exports and reducing imports has already started helping Bangladesh’s economy recover. However, the impact of the Covid-19 pandemic and the Russia-Ukraine war on the economy cannot be denied, the report said. But the government is determined to keep the economy stable. Two of the main pillars of the economy are garments and foreign currency sent by expatriate Bangladeshis. Bangladesh’s foreign exchange reserves are in a strong position compared to other developing countries in the world.

The report also said that in the meeting of the World Bank and the International Monetary Fund (IMF) in April this year, Bangladesh was praised for the successful implementation of the policies taken to deal with the coronavirus and economic recovery from its effects. The report also highlighted Bangladesh’s extraordinary success in reducing child and maternal mortality. It has been said that in the last five decades, Bangladesh has achieved the top position in South Asia by reducing child and maternal mortality rates.

Learn from Sheikh Hasina: Pakistan’s newspaper The Express Tribune published an article praising Prime Minister Sheikh Hasina’s leadership for Bangladesh’s economic development. The article published on Tuesday titled ‘Takeaway from Bangladesh’s Leadership’ was authored by Sahebzada Riaz Noor. Sahebzada Riaz Noor, a postgraduate from Cambridge, was the Chief Secretary of the Khyber Pakhtunkhwa province of Pakistan.

Noting that Bangladesh has experienced significant economic changes over the years, Riaz Noor said the credit for this development can be given to the country’s leadership. Recently, Prime Minister Sheikh Hasina inaugurated the Padma Bridge, calling this bridge a ‘symbol of pride and power’ of the country.

In the article, he said, Sheikh Hasina has been involved in Bangladesh’s economic problems and plans since the 1990s. He focused on balancing economic policy with political influence. Sheikh Hasina moved away from her father’s socialist agenda towards market-based capitalist growth. He has learned from other Asian countries, which have four pillars of economic success.

These foundations are political stability, social development, export-led growth with trade liberalization and fiscal restraint.

At a conference, when an economist was telling her about the benefits of trade liberalization, Sheikh Hasina stopped and said, “I don’t need to convince you about trade liberalization.” When I lived with my physicist husband in Trieste, an Italian city on the border with Yugoslavia, I saw the border open three times a week and people traveling on both sides, buying goods and returning.” Instead, Sheikh Hasina focused earnestly on the economy.

Despite the lack of accountability and military rule in Bangladesh between 1971 and 2009, the army has been on the sidelines since 2009. Bangladesh has experienced frequent slippage of civilian governments and little legitimacy or illegitimacy of governments. The country’s democratic history is far from spotless, and the government has repeatedly avoided public criticism of corruption and inefficiency. The current Prime Minister Sheikh Hasina is a visionary and has strong convictions. He felt that economic progress is the only way to alleviate poverty in the country.

Over 15 years of sustained growth, Bangladesh has become one of the world’s fastest-growing economic powers despite accusations of coercive control by the opposition. The country was 75 percent poorer than Pakistan in 1970, but is now 45 percent richer than Pakistan.

In 1970, the population of Bangladesh was 1 crore more than that of Pakistan. And now the population of Bangladesh is 170 million against the population of 230 million in Pakistan. Bangladesh’s export in 2021 is 47 billion dollars, Pakistan’s 28 billion dollars.

Bangladesh’s per capita income is now $2,227 compared to $1,543 in Pakistan. The gross domestic product (GDP) in Bangladesh in 2022 is 411 billion dollars, in Pakistan it is 347 billion dollars. Annual inflation rate in Bangladesh is 6 percent, compared to 12-15 percent in Pakistan. Inflation in Pakistan currently stands at 21 percent and is expected to rise further in Saman. Besides, the Bangladeshi taka is much stronger than the Pakistani rupee. Along with the high participation of women in the economy of Bangladesh, the literacy rate is very high.

Political parties in Pakistan are still busy with their own interests. Repeated manipulations of the democratic process have hindered the path of political parties to a strong, democratic and non-patrimonial path. It is undeniable that economic growth is closely related to political stability, rule of law, strong civil institutions and participatory democracy. Pakistan inherited a state in which a weak bourgeois population was embedded in a donor-recipient relationship within a strong state structure.

The country has inevitably witnessed economic and political evolution driven by privileged and authoritarian groups. Primarily agricultural and business income are excluded from the ambit of taxation. Many industries are exempted from any duty. It is not surprising that our parliament is dominated by landlords, thus rejecting the issue of agricultural income tax. However, this has resulted in the overall tax net remaining small due to lower taxes in the agricultural and industrial sectors.

Following the example of Bangladesh, the Pakistani leadership must pursue economic growth as a national goal and promote regional peace as well as constitutional governance.

Adequate resources must be invested in social and economic development without compromising effective defence. Foreign trade agreements with India, Iran, China, Afghanistan and other trading partners should be considered considering the need for regional trade liberalization. Besides, high-value-added products should be re-emphasized in developing export growth models.

Pakistan’s advantage of relatively cheap labor should be channeled into improved efficiency and productivity. In order to increase the participation of women in the workplace, extensive initiatives should be taken in education and technical training for women. Besides, ensuring a safe and favorable legal environment for foreign investment is crucial.

There needs to be a strong effort to impose a fair tax on agricultural income. Wealthy industries must make their due contribution to the growth of national wealth. Large corporate and institutional sectors should be brought under tax.

Pakistan’s leadership can learn a lot from Bangladesh’s experience. But the main move should be to pursue Sheikh Hasina’s priority of economic growth, which is important for both defense and democracy.

Samina Akhter is a Dhaka-based freelance writer and women and human rights activist.