Tens of thousands of people are taking to the streets in Dhaka to protest against the Bangladeshi government and to demand the resignation of Prime Minister Sheikh Hasina. The protesters have demanded elections in the country amid growing political tension, the rising cost of living, and the country's fragile economy. This is the condition of a country that was growing on the path of development even during the Kovid epidemic and which had maintained this pace.
What happened suddenly was that this country had to seek help from the International Monetary Fund (IMF) in November last month to stabilize its faltering economy. IMF has agreed to help this country and it is going to provide financial assistance of $ 4.5 billion (about Rs 37,000 crore) to this country.
The thing to note is that this is a significant reversal for an economy that has seen a better phase of the economy in the last two decades. Especially since 2017, based on strong economic growth, Bangladesh has also overtaken India in terms of per capita income in 2020. Now the situation here is that the Bangladesh Nationalist Party (BNP), the main opposition party of this country, is besieging the Awami League government and its leader Prime Minister Sheikh Hasina to capitalize on the growing economic crisis.
He is conducting many protest rallies across the country. The BNP is seeing this as an opportunity to oust Sheikh Hasina, who has dominated Bangladeshi politics for more than a decade. What went so wrong with Bangladesh's economy that it has reached the brink of economic bankruptcy like Pakistan and Sri Lanka?
Low exports affected foreign exchange reserves
The Russia-Ukraine war has played an important role in derailing the economy of Bangladesh which is running on the right track. Exports from this country have become a victim of this war. The export sector of the country is badly affected due to the fall in the demand of western countries. This has directly affected the foreign exchange reserves of Bangladesh.
The country's foreign exchange reserves are rapidly depleting due to a decline in garment exports and remittance flow. From 2011 to 2021, Bangladesh's total foreign debt increased by 238 percent to $91.43 billion. Significantly, during this period Sri Lanka's debt saw an increase of 119 percent and it is still not completely over.
In Bangladesh, the rate of inflation (inflation) reached almost 9 percent in November, due to which thousands of unemployed garment workers have now reached the brink of starvation. Bangladesh has recently become the third South Asian country after Sri Lanka and Pakistan to seek help from the International Monetary Fund (IMF) in 2022.
Power cuts and fuel prices upset the math
Bangladesh with its large youth population was at the forefront of economic development in South Asia when the Covid-19 pandemic hit. Now the country's story of becoming rich from poor is being weakened by its political and economic chaos. There have been protests against the government recently due to power cuts and a hike in fuel prices.
This is a direct indication of Bangladesh getting trapped in a deep economic crisis. Here Bangladesh, like Britain, can claim that its current economic crisis has arisen due to external factors. But when demand-supply chains were disrupted due to the fall in global demand and the Kovid-19 pandemic, and now Russia's war in Ukraine exacerbated Bangladesh's troubles that existed long before 2020.
According to Ali Riaz, president of the American Institute of Bangladesh Studies, "This is a crisis that has emerged from government mismanagement. Even if there was no COVID crisis, even if there was no Ukraine crisis, Bangladesh would still be sleepwalking through this crisis." Had been." It is well known that the Russia-Ukraine war has raised energy costs around the world, but it has hit Bangladesh especially hard.
This country imports about 77 percent of its total oil and refined fuels. The country's acute fuel crisis is taking a toll on its ability to keep the electricity running. Here, a 10-10 hours power cut is being done in the whole country, which is pushing the people here into darkness. The rest of the work of pouring ghee into the fire has been done by the government.
To keep the power grid running, the Bangladeshi government has contracted several private electricity providers. Even if electricity is not given as per the demand, the government gives subsidy and pays to these people. In fact, in a report released by Transparency International Bangladesh this year, evidence of corruption has been found in the investigation of all three power plant projects.
How will IMF help work?
According to the IMF, "Bangladesh's request for assistance is part of its efforts to protect its economy from economic disruptions caused by the ongoing war in Ukraine and to manage macroeconomic risks arising from climate change." But this is not the only reason for seeking Bangladesh's help. Indeed, even as Bangladesh deals with these immediate challenges, it is also important to address long-standing issues such as climate change, and private investment.
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