Bangladesh’s Economic Crisis

Bangladesh's Economic Crisis

Is Bangladesh’s economic crisis following Sri Lanka’s footsteps?

In this article, we discuss about Bangladesh’s Economic Crisis. Last week Bangladeshi protesters marched after the government announced a 51.2% fuel price hike, the highest price increase since East Pakistan became independent in 1971. The Bangladesh government has negotiated bailouts from the world’s largest financial institutions, the IMF, and has applied for $1 billion in loans from ADB and the World Bank to boost liquidity after its international reserves fell to $38.4 billion last month. And the trade deficit reached $33.3 billion. in the fiscal year ending in the month last June.

International economic experts view that although the situation in Bangladesh is daunting. It may be the next country to collapse like Sri Lanka due to Bangladesh’s economic crisis. But in reality, Bangladesh has a higher economic growth rate than any other country. and believes that Bangladesh is not as bad as Sri Lanka.

Bangladeshi Economic Crisis: Another South Asia Country

Bangladesh’s economic crisis led another South Asian country facing a crisis in its international reserves. and the number of trade deficits has risen. Since the outbreak of the COVID-19 pandemic, the international trade economy has stalled. It also faces the problem of high oil prices from the prolonged Russian invasion of Ukraine. 

The Bangladesh government’s decision to announce a massive fuel price hike has led to protests showing dissatisfaction with the government’s economic administration. Like the protests against rising oil prices in Pakistan and massive protests in Sri Lanka that led to the overthrow of Kotabaya Rajapaksa’s government. 

Bangladesh’s economics crisis: Bangladeshi protesters

Last week, Bangladeshi residents protested in protest over the government’s surge in gasoline and diesel fuel prices by 51.2%, shocking and stunned by the overnight rise in oil prices. Morning workers have to bear the increased costs. especially the poor and middle-income families who cannot bear the increasing daily expenses causing more and more people to protest.

Several student organizations have protested, including the Bangladesh Students’ Union where a large protest was held in front of the National Museum in Chabaek. As the protests spread from Dhaka to other cities. The protests in Sri Lanka a few months earlier. 

The energy ministry said high oil prices were a result of inevitable external factors, such as the impact of the conflict between Russia and Ukraine. While the Bangladeshi company Petroleum also suffered a loss of more than $85 million on oil sales in the six months to July.

 

Bangladesh's Economic Crisis
Bangladesh’s Economic Crisis

 

Bangladesh’s economics crisis: How bad is the situation

Factors of the plague and war in Ukraine make Bangladesh Taka weakened greatly in the past 3 months. The currency has weakened by as much as 20%, causing the government to delay the country’s investment plans.

The latest information indicates that Bangladesh’s international reserves fell from $4.5 billion last year to $38.4 billion last month. Expected to be able to import essential goods for only 5 more months. But due to Bangladesh’s economic crisis they will face serious problems in the coming days.

At the same time, the trade deficit reached a record high of $33.3 billion. in the fiscal year ending in the month last June. And the inflation rate has risen above 6% continuously for the past 9 months. and jumped to 7.48% in July.

In addition, Bangladeshi citizens need to save on electricity. Due to rising energy costs, the government of Bangladesh has taken measures to solve the power shortage problem by declaring electricity rations. Announcing the synagogue to turn off the air conditioning when people attend religious ceremonies. 

Asking for help from international financial organizations

Bangladesh has historically been one of the fastest growing economies in South Asia. In November last year the United Nations removed Bangladesh from the list of the world’s least developed countries.

However, Bangladesh has been hit hard by a host of global problems, including the epidemic and the Ukrainian war. That makes food and fuel prices skyrocket in the world market causing the government to seek foreign aid. Including sending letters to negotiate for assistance from the world’s largest financial institutions such as the International Monetary Fund. International Monetary Fund with a loan of $ 4.5 billion in which Bangladesh is the latest country in South Asia. After Sri Lanka and Pakistan borrowed money from the IMF in order to solve Bangladesh’s economic crisis.

The Bangladesh government has also applied for a $1 billion loan each. From the Asian Development Bank and the World Bank to help alleviate the country’s economic downturn while its reserve funds have dropped sharply.

Is there a chance to trace Bangladeshi economics crisis?

There is a serious economic crisis in Bangladesh, and it may become the next country to collapse like Sri Lanka. The reality, however, is that Bangladesh has a higher economic growth rate than any other country, and many believe that the country is not as bad as Sri Lanka.

According to Bloomberg magazine, getting a loan from the IMF is just a precautionary measure before a catastrophic situation arises. Unlike Sri Lanka, who came to apply for a loan when everything was broken. and the government is running out of solutions 

Rahul Anan, Head of the IMF’s Asia and Pacific Division, once said in an interview: Bangladesh’s economic crisis is not yet a serious crisis. And Bangladesh’s financial status is superior to other countries in the region. 

Economists consider Bangladesh’s international reserves to have fallen below $40 billion. But still enough to import products for about half a year before believing that the situation could be solved. The current big protests are based on people who want to stir up peace to overthrow Sheikh Hasina’s government.

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