02 Aug BANGLADESH ECONOMIC CRISIS
WHY IN THE NEWS?
- Bangladesh has recently approached to the IMF for a $4.5 Billion bailout.
- Inflation in Bangladesh is hovering above 7%
- The forex reserve has seen a fall from $45.5 billion from an year earlier of $39.67 billion
- Bangladesh has also experienced lengthy blackouts in recent weeks, sometimes for up to 13 hours a day, as the country struggle to source enough diesel and gas to meet demand.
- Bangladeshi Taka has fallen from 85 some time back to currently 95 with respect to US dollar
WHY CAUSE OF CONCERN?
a) GEO-ECONOMIC CRISIS : Could get fueled ,as after Sri Lanka and Pakistan, Bangladesh will be the 3rd nation to face such economic crisis in the Indian subcontinent region.
d) Per capita Income: Of Bangladesh which was more recently greater than India could see the decline.
e)COMMUNALISM and RELIGIOUS FUNDAMETALISM : Economic woes could pave the way for the islamist fundamentals to rise which till now have been effectively controlled by Sheikh Hasina government under its economic hammer.
WHAT LED TO THE CRISIS?
- INFLATION IN USA:
1.1) Inflation in USA has led to decrease in the demand of clothes and wearing in the stores like Walmart
1.2) Store like them usually get their textiles import from the country like Bangladesh
1.3) Due to the decrease in the demand , the exports of Bangladesh have hence been severely affected
1.4) This has led to the loss of foreign exchange reserve and slight enhancement of Current Account Deficit .
2. COVID SCENARIO
2.1) Loss of Employment: Of the Bangladeshi nationals in the foreign countries has reduced the remittances coming to the country.
2.2)Loss of Forex: Earlier the money sent by Bangladeshis to their own country hence now could not be reached.
WHAT ARE THE REPURCUSSIONS FOR INDIA?
a) DEBT TRAP DIPLOMACY: Of China could come in place in order to strengthen its string of pearls around India, as done in the case of Pakistan.
b) Burden for India: Under its Neighborhood first policy, India will be forced to give economic aid to Bangladesh, as it has done with Sri Lanka.
IS THE SITUATION REALLY BAD?
- Bangladeshi foreign minister A H M Mustafa Kamal said that their is no such crisis in the country.
- He reiterated that the approach to IMF is only precautionary, in order to deal with the probable future rise of the crude oil prices in the future.
- Foreign Aids: Bangladesh has been recently given the foreign amounting to $10 billion from various parties such as Asian Development Bank, World Bank, Japan, China etc.
WHAT LIES AHEAD?
- Focus on the infrastructure- For enhancing the capital investment in the economy.
- Banking sector regulation: That it doesn’t collapse in this emerging scenario.
- Investment in climate change.: For sustainable farming in order to ensure food security in the coming future.
- Diplomatic vigilance : That Bangladesh should not become the prey of “China’s Wolf Warrior Diplomacy”.
India also went for bailout in 1991, but came out of the economic woes very successfully. Bangladesh need to understand and learn from its neighbors like India, that how it can sail through the situation wisely. This way it could not only ensure the social security of its population, but could also ensure Geo-Economic and Geo-political stability.