A statement by Bangladesh Finance Minister Mustafa Kamal told the world the reality of China. Mustafa Kamal, the Finance Minister in the Sheikh Hasina government, said – China's Belt and Road Initiative (BRI) is good, but the loans China is giving to poor countries on the pretext of this can destroy these small and developing countries.
Kamal's statement is very important. The reason for this is that for the first time any government and especially the Finance Minister has given such a direct warning to poor countries against China's debt trap. The question is how much truth is there in this allegation of Bangladesh. Here we try to know the truth in light of the economic condition of Bangladesh, Sri Lanka, and Nepal.
China's role in Bangladesh
Bangladesh has been involved in China's Belt and Road Project ie the BRI project. Under BRI, there is a plan to connect 70 countries in Asia, Europe, and Africa by rail, road, and sea. China wants to build ports, naval bases, and observation posts in the Indian Ocean or say India's close countries. Through BRI, China is spreading its foot in our neighboring countries like Bangladesh and Nepal.
Bangladesh's foreign reserves are less than $ 40 billion
Inflation increased in Bangladesh in two months. Fuel i.e. petrol and diesel became costlier by 52%. Sheikh Hasina's government says that fuel prices have increased in the international market due to the Russia-Ukraine war, hence the pressure was increased.
The most worrying thing is Bangladesh's foreign exchange reserves (Foreign Reserve or Forex Reserve). They have now come down to less than $40 billion. The government itself says that only five months can be imported from this reserve. What after this? This is an important question.
Bangladesh reached to IMF
Bangladesh has joined the countries in Asia that have approached the International Monetary Fund (IMF) to deal with the depletion of foreign reserves. Bangladesh has sought a $4.5 billion package from the IMF. However, right now only talks are going on. Apart from this, the Sheikh Hasina government has also sought a $4 billion loan from the World Bank, Asian Development Bank, Asian Infrastructure Bank, and Japan International Cooperation Agency.
To understand very simply, the Hasina government is requesting help from World Financial Bodies, India, and IMF to save Bangladesh from bankruptcy which is moving on the path of Sri Lanka and Pakistan. Now the question is why India only? Let's understand this too. Bangladesh is the world's largest exporter in the readymade garments sector after China. But, the truth is that India gives 90% of the cotton for this. If India withdraws, Bangladesh will be bankrupt in a few months. This is the reason why Sheikh Hasina held talks with our Finance Minister Nirmala Sitharaman in the past.
What did China do in Sri Lanka?
Now let's go to Bangladesh's Finance Minister Mustafa Kamal. He said – China is not honest and transparent about its projects. Its terms of lending are poor and extremely stringent. Therefore, many small and poor countries are getting into trouble. Sri Lanka is an example of this.
China makes strong investments in developing countries in the form of loans. He also started several infrastructure projects in Sri Lanka. They did not generate revenue, on the contrary, Sri Lanka went on becoming indebted and finally went bankrupt.
Sri Lanka trapped in China's BRI
Sri Lanka played an important role in China's Belt and Road Project (BRI). The Rajapaksa government had taken a loan of $1.26 billion for the Hambantota Port. They thought this would benefit the trade. Will repay the loan with this. But, the opposite happened. Sri Lanka could not repay the loan and was helpless and had to give Hambantota Port to China on lease for 99 years. China also wanted the same.
China wants to control Nepal's economy through BRI
In May 2017, an agreement was reached between China and Nepal regarding the BRI project. Through this, China is trapping Nepal in the web of its conditions in the name of free trade connectivity.
China wants Chinese currency to be used in Nepal as well. Surprisingly, Chinese goods are sold in Nepal at zero customs duty. This means a loss to Nepal from all sides.
It was said to strengthen roads, civil aviation, power grid, information, and communication in Nepal. China had the same conditions as Sri Lanka. As a result of this, the world is seeing what has happened there.
Nepal's foreign reserves are also less
In the middle of March 2022, the country's foreign exchange reserves were reduced to just $ 975 million. In July 2021 it was $ 1,175 million. In about seven months, Nepal's foreign exchange reserves have reduced by 24 thousand crore Nepalese rupees. Nepal's foreign exchange reserves can import 6.7 months at this time and this should be the biggest concern for it.
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