The economies of Bangladesh and Sri Lanka are not comparable. Bangladesh's remittances (ex-pat income) are rising, and the country's reserves are at an all-time high. In addition, the money created by the export of well-known Made in Bangladesh products to countries throughout the world is continuously increasing
The South Asian island nation of Sri Lanka is facing its worst economic recession in history. It is going through a difficult time in the midst of political and administrative crises.
The collapse of the tourism industry, the country's main source of income, in the last two years is largely blamed for Sri Lanka's debacle.
The huge foreign loan installments acquired earlier for various projects to attract tourists, on the other hand, must be returned.
Furthermore, industrial production has plummeted, as have export profits and remittances.
The country is in an alltime economic crisis, including a production deficit, despite lowering taxes and VAT and reducing the use of pesticides in agriculture to zero.
Pakistan's fragile economy – high inflation and low growth – is another hot point in South Asia now, which has created political problems in that country.
The Asian Development Bank (ADB) has, however, said that Bangladesh will not face the same economic crisis as Sri Lanka. Edmin Ginting, the agency's resident representative in Bangladesh, has said Bangladesh's macroeconomic management is very good.
In addition, the debt-to- GDP ratio is tolerable.
He made the remarks in response to questions from reporters at the launch of the ADB report 'Asian Development Outlook' last week. Ginting said Bangladesh's debt management is very good. However, Ginting has advised Bangladesh to be careful on two issues.
These include strengthening the debt management policies and increasing internal revenue collection.
Bangladesh's Prime Minister Sheikh Hasina has said that Bangladesh is very alert to the economic crisis in Sri Lanka. She said that since the formation of the government, the country has been repaying all the loans it has taken for development on time. Bangladesh is a country that has never defaulted on its loans.
The economies of Bangladesh and Sri Lanka are not comparable. Bangladesh's remittances (ex-pat income) are rising, and the country's reserves are at an all-time high.
In addition, the money created by the export of well-known Made in Bangladesh products to countries throughout the world is continuously increasing.
Bangladesh has foreign exchange reserves worth 44.40 billion dollars. Sri Lanka, on the other hand, has reserves of less than 2 billion dollars.
At present, the foreign debt 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 US$ 292.11. Sri Lanka, a country of 20 million people, on the other hand, has a total foreign debt of $33 billion. As such, the per capita debt is $1,650.
The per capita debt of the people of Sri Lanka is 5.5 times more than that of Bangladesh. Since 2014, the debt burden had started to increase while its GDP was gradually falling. In 2019, foreign debt reached 42.6 percent of GDP, whereas in Bangladesh it is less than 13 percent.
Last January, Sri Lanka's remittances were worth only $271 million. In January, remittances of Bangladesh reached nearly $17 billion, and in March, remittances touched$18.6 billion. In last fiscal year 2020-21, Bangladesh saw a record remittance of $24.7 billion even during the pandemic period. In 2021, Sri Lankan remittances were worth about$8 billion, hit largely by the pandemic.
Although Sri Lanka's export earnings have plummeted, the opposite has happened in Bangladesh.
In March, Bangladesh earned $4.76 billion from exports. In January, Sri Lanka earned $1.1 billion from exports.
Bangladesh's economy has improved even in the midst of the coronavirus pandemic. Overall, all of Bangladesh's economic indicators are improving and is, therefore, unlikely to suffer the same economic catastrophe faced by Sri Lanka, whose indicators are negative.
Sri Lanka's inflation was 16 percent a few days ago and continues to rise.
Bangladesh's inflation, on the other hand, is 6 percent.
That means Bangladesh's economic management is much more integrated.
Sri Lanka's GDP fell 3.6 percent whereas Bangladesh's GDP has increased by 3.51 percent.
Bangladesh is, therefore, on the right track. Infrastructure projects like the Padma Bridge will be launched in June. A metrorail, Bangabandhu tunnel and some special economic zones are also to be launched this year. The launch of these projects will add a new dimension to the development of Bangladesh. Once these projects are implemented, the returns will come immediately.
Investment in the country will increase, so will employment and GDP growth.
Bangladesh does not face a scarcity of food production.
The country's primary food imports are not entirely reliant on imported goods. Bangladesh has plenty of food stocks in government warehouses, more than at any time in the past, about 2 million tons. Due to bumper yields in the past few years, people also have ample stocks of paddy and rice. So, Bangladesh does not have to worry about food for one or two years. It is unlikely that inflation will rise to 20 percent as in Sri Lanka.
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 today employs nearly 2.5 million of the country's 4.22 million female workforce.
Bangladesh also 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.
Bangladesh has a very strong leadership, pragmatic fiscal policy and plenty of foreign exchange reserve. So, Bangladesh needn't worry about the kind of economic collapse seen in Sri Lanka, although caution is advised.
A version of this article appears in the print on April 14, 2022, of The Himalayan Times.