Developing countries taking short or long term loans or assistance from international financial institutions like World Bank, IMF, ADB, IDB or JICA for investment in development projects are not something new. This has been happening since the end of the Second World War and that most of these countries came to the position of taking loans from such institutions is simply because the colonial powers in the past siphoned away staggering amount of resources from these countries to develop their own countries in the West. Once the Indian sub-continent contributed to approximately 24 percent to world’s GDP but the English colonial rule just pauperized India over its two hundred years of colonial rule that ended in 1947. During their rule Bengal Presidency (included parts of Bihar and Orissa) contributed bulk of the revenue to the English coffer. However it is now a story of the past that the English conveniently forgot.
At birth Bangladesh inherited nothing from the Pakistani rulers except the devastation caused during the nine month long Liberation War and it was only the statesmanship like leadership of Father of the Nation Bangabandhu Sheikh Mujibur Rahman Bangladesh which could lift Bangladesh from an economic quagmire to a LDC status. During his three and a half year rule not much of assistance were either requested or taken from these international financial institutions. The much needed financial and commodity assistance came from friendly countries like Japan, former USSR, Australia, Sweden, Britain or even from India that helped the rebuilding the war devastated economy of the country. One must not forget that India gave shelter and fed ten million refugees from Bangladesh during our nine-month Liberation War. When Bangabandhu was assassinated, Bangladesh’s GDP growth rate stood at 9% plus, never achieved even till today.
While Bangladesh’s economy was cruising smoothly and its GDP growth rate hovered around 8 percent and was branded internationally as a country of mysterious resilient economy and one of the five fastest growing economies in the world along with it being branded by global think tanks as a `growth model for the developing world the world’ it was hit by a two year shutdown virtually of all sorts of economic activities due to Covid-19 pandemic. Even the World Bank which played so much of hide and seek game with the financing of the Padma Bridge called Bangladesh `an inspiring story of growth.’ Last year when the world was struggling to keep its economy afloat International Monetary Fund (IMF) predicted Bangladesh’s GDP would soon exceed that of Denmark and Singapore. No sooner had the intensity of pandemic slowed down, than Russia and Ukraine entered into a senseless war, this time Russia being the aggressor. The big powers instead of trying to stop the war fuelled the war as these countries benefitted out of the war as their economy heavily depends on sale of arms and ammunitions, does not matter which countries are put under extreme economic stress due to such wars.
Now coming back to Bangladesh story, in last fifty years the economic face of Bangladesh changed beyond recognition as mentioned earlier, most happening since Sheikh Hasina took over the reins of the government in 2009. The quality of life of people improved substantially, life expectancy increased, infant mortality decreased, increase in per-capita income even surpassing that of neighbouring India is real. Virtually in the pre-Covid period Bangladesh performed better that most of its neighbouring countries and countries of South and South East Asia, excepting China. It was during the rule of Sheikh Hasina’s government that its foreign exchange reserve for the first time rose to US$ 48 billion. Then came the post-Covid war in Europe wreaking havoc particularly in developing countries like Bangladesh and even in most European countries. The half-baked politicians of Bangladesh refuse to acknowledge that the current economic slowdown of Bangladesh is tagged to the continuous global slowdown, and Bangladesh’s economy is intertwined with rest of the world. These politicians and self-appointed pundits refuses to accept the concept of globalization and whatever happens good or bad in one part of the world has a domino effect in another part.
Bangladesh is the second largest exporter of clothing behind China that fetches nearly 85 percent of its foreign exchange earnings and employs a staggering four million workers of which approximately 80 percent are women. It is considered an important driving engine of Bangladesh’s economy after its agricultural sector. But when the Covid-19 hit Bangladesh, it simply wrecked havoc with the Bangladesh’s garments sector in spite of the fact that the government generously came out with different types of incentive packages. Initially one million people either were out of job or were underemployed or underpaid. Here too the government stepped in and saw that no one goes hungry. The good news is that with the growing tension between US, a leading importer of readymade apparels from China, the exports from Bangladesh have begun to show an upward swing though in monetary terms it is yet to regain its previous position due to increase in the dollar price. Interestingly export figures showed a strong positive growth for 14 months in a row, but it took a bid dip in last September due to fresh economic woes in the West. People are investing more in food and housing in US and Europe and postponing purchase of other non-essential products like apparels. The World Bank and other international think tanks have predicted that 2023 will see a global recession in the West and if that becomes a reality it will not only adversely affect Bangladesh but also most of the countries around the world, rich or poor. To combat the impeding economic recession Sheikh Hasina has already announced austerity measures in all spheres of our everyday life and recently put an embargo of all foreign travels by government servants. Now this needs to be closely monitored.
Bangladesh is also currently struggling to cope with the growing demand of keeping its energy demand to a tolerable level. A big part of the energy production heavily relies on imported fuel which keeps on getting expensive again due to the war in Europe and disruption in the supply chain. The power supply as in many developed countries in the west has been rationed. Amidst all these depressing news the good news is that wheat from Russia and Ukraine have started to arrive in Bangladesh and it has been trying to source fuel from other countries like Brunei. Though energy crisis is a reality across the world, Bangladesh seemed less equipped to handle the shock. Currently the government is scrambling to diversify away from expensive gas and leaning more on coals something even countries in Europe like Germany are also doing. The drilling for new gas wells are going on in full swing and its first nuclear power plant in Rooppur is due to start operating next year. It is also a fact that remittance from the diaspora has shown a decreasing trend due to the increasing living cost in those countries and some flawed policy of Bangladesh Bank, which now have been to some extent mended. In 2021 they sent home a record US$22.7 billion which has now come down by approximately 7 percent. It will take some time before remittance from Bangladeshi workers to become normal and it may not happen till the economy of the countries they are employed in improves.
To ease economic stress, Bangladesh requested IMF assistance few months back. In fifty years of its history Bangladesh took loans from IMF on twelve different occasions and it never crossed. As soon as Bangladesh requested assistance from IMF, a new arrival in Bangladesh’s sticky politics, who formerly worked with IMF questioned such a request and very sarcastically said Bangladesh does not have any ‘mama’ (maternal uncle) in IMF who will help Bangladesh get this assistance. His remarks were also picked up by other critics and politicians of the current government. Amidst all this dusty environment came a high powered delegation of IMF to Bangladesh on 26 October, talked with different policymakers of Bangladesh and the stakeholders, assessed the capability of Bangladesh in using the fund and the ability of timely repayment of the assistance. It discussed the issue with all the stake holders, discussed the matter amongst themselves and finally on 9 November announced that it has decided to recommend to their Board in Washington to grant Bangladesh US$ 4.5 billion in seven instalments, the amount Bangladesh requested for. IMF spokesperson clearly said that Bangladesh never defaulted in paying its debts till now. Even before IMF visited Bangladesh a section of local media deliberately misinformed that Bangladesh’s economy is so bad that it needs a bailout package from IMF which IMF refuted immediately. Though the IMF’s announcement of granting the assistance has silenced these self-styled pundits strangely BNP’s Secretary General has demanded to disclose where the money will be spent. His sense of proportion seems to be waning.
The writer is an analyst and commentator