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Is Bangladesh going to become Sri Lanka? Is Bangladesh on the verge of bankruptcy?

 The Sri Lankan government has finally informed that they do not have the ability to repay the huge amount of foreign debt, that is, the country was forced to declare itself as bankrupt. Of course, it was understood that by looking at the context of the last few days, it was thought that there is no other way open to Sri Lanka except to declare bankruptcy. However, many citizens of Bangladesh are very worried about the plight of Sri Lanka. Being burdened with a huge amount of foreign debt is a major reason for Sri Lanka's current situation. Bangladesh also has to take a lot of foreign loans to carry out infrastructural development activities. There is corruption here, there is inflation, the prices of goods are increasing by leaps and bounds. And so there is a panic among the common people. A few years from today, Bangladesh will not be like Sri Lanka?

Before that we will explain the reasons for Sri Lanka's current plight. Not a complicated political or economic discussion. We will try to explain the whole matter in a very simple way. So let's begin.

In Sri Lanka, the oil crisis has been going on for the last few days. Lack of cooking gas. Horrible food crisis has also occurred in the market of daily necessities. Most of the day there is no electricity. Due to lack of paper, the examination of educational institutions and the publication of newspapers are closed. Lack has appeared in the market of kerosene or petrol. Sri Lanka is an island nation where many things of daily necessity have to be imported. For example, LPG gas, petrol, diesel, but the country's treasury does not have the necessary money to import these essential products. Because their foreign exchange reserves have run out. The country burdened with foreign debt is not able to repay the loan installments. The severe crisis of foreign exchange has made the country's economy unmanageable. This crisis and skyrocketing commodity prices have created mass discontent. The Sri Lankan common people have attacked the president's house and clashed with the army. Curfew has been imposed on the streets of Colombo. After gaining independence in 1948, the country has never been in such a bad condition in the history of the last seventy four years. Why is Sri Lanka, once the most advanced country in South Asia, dying?

A large part of Sri Lanka's income comes from tourism. Although small in size, Sri Lanka is much more popular as a tourist destination than neighboring countries Bangladesh or Pakistan. In 2019, Sri Lanka's income from this sector alone was more than twelve billion dollars. Thousands of people in Sri Lanka were associated with various businesses and jobs related to tourism. Everything was going well. But the disaster is bound to happen in 2020. With the arrival of Corona, the whole world was locked up. Air traffic stopped. Disaster struck Sri Lanka's tourist sector. Due to the epidemic, the amount of remittances fell to almost zero. Sri Lanka's economy took a big hit. This country could never overcome the effects of that shock.

Militants bombed Colombo on Easter Sunday in 2019. Hundreds of people were killed in that attack. Most of them were tourists. The perception that Sri Lanka was a safe destination for foreign tourists changed after the attack. However, if you think that the Easter Sunday attack or Corona is the only reason for Sri Lanka's plight, then you would be wrong. Sri Lanka has been burdened with foreign debt for many years. Especially in the last fifteen years, Sri Lanka has undertaken several expensive and ambitious projects, most of which have proved to be unnecessary and economically unprofitable. Examples include the Hamand Tota seaport and airport. These projects could not bring anything other than increasing the burden of foreign debt for the economy of this country. The government's wrong policies must also be blamed for Sri Lanka's current situation. Taking unplanned projects and indifference towards important projects. For example, Sri Lanka's electricity demand is increasing at the rate of eight percent every year, but since 2014, the country has not initiated any new power plants. Power crisis is now a death blow. The unplanned mega project has become a thorn in the neck rather than a symbol of Sri Lanka's development. Many Sri Lankans working abroad lost their jobs during Corona. The scope of work has also decreased. Sri Lanka's remittance income has also decreased, but King Pak's government has not paid any attention to this.


The Ministry of Foreign Affairs of the country has not taken any proper measures and has not increased the communication with the friendly countries. Besides, the Sri Lankan government has been extremely negligent in the name of reforming foreign currency. Sri Lanka's economy has been dependent on debt since independence. But the burden of debt has never sat on the neck of Sri Lanka as it is at present. Not even during the Civil War. Currently Sri Lanka's debt ratio is one hundred and nineteen percent of GDP. In the last decade and a half, the country has gradually been burdened with debt. According to the International Monetary Fund, Sri Lanka is expected to pay a total of five billion dollars this year as debt repayment. But now Sri Lanka has only two hundred and thirty one billion dollars in foreign currency reserves. Therefore, the country has to take more loans to carry out daily activities, far from repaying the debt. On the other hand, foreign investment has also decreased in the last two years. President Gotabaya announced to reduce vat and tax to win Rajpaks. Naturally this declaration of his helped him to get through the electoral process. As a result, the revenue of the government has decreased up to twenty five percent. Which forces Sri Lanka to take more foreign loans.

Another mistake made by Sri Lanka. That is the implementation of the decision of the agricultural sector to start organic farming overnight. Banning the import of chemical fertilizers to reduce the pressure on foreign exchange reserves. The use of chemical fertilizers and pesticides in agriculture is prohibited. As a result, Sri Lanka's food production dropped by about a third. Food prices rise. The Sri Lankan government had pegged the value of one dollar to two hundred and three Sri Lankan currency regardless of side. But one dollar is now being sold in the market for two hundred and forty to two hundred and sixty six Sri Lankan currency. Now it has reached almost three hundred. As a result, most people have broken foreign currency in the black market in the hope of earning more. Sri Lanka's currency inflation is now at such a terrible level that a kg of rice is being sold for 250 to 300 rupees. Citizens of the country have to spend three thousand rupees for twelve liter LPG cylinder gas. They are sitting with money in hand. But the desired product is not available.

Can Bangladesh ever suffer the consequences of Sri Lanka?

It is very important for you to have an idea about the comparative state of the economy of Bangladesh and Sri Lanka to facilitate the discussion. Sri Lanka's total debt is thirty-three billion dollars. Since the total population of the country is two million and twenty million. Accordingly, Sri Lanka's per capita debt amount is sixteen hundred and fifty US dollars. On the other hand, the total debt of Bangladesh is fifty nine and four five billion dollars. And since the total population of Bangladesh is sixteen million and ninety-three million. As such, the amount of debt per capita is two hundred and ninety-two decimal one dollars. Sri Lanka's per capita debt is about six times higher than Bangladesh's. Sri Lanka's remittances have reached the bottom due to the corona epidemic. The country's remittances in 2021 were 8.5 billion dollars. On the other hand, the remittance of Bangladesh in that financial year was 24.78 billion dollars. Which is almost three times more than Sri Lanka. Bangladesh is not in a dangerous position in terms of debt repayment. According to the calculations of the Ministry of Finance, the debt ratio in Bangladesh is now thirty-eight percent of GDP. As of last June, the total debt amount of Bangladesh was eleven hundred forty four thousand two hundred and ninety seven crores. About thirty-seven percent of this came from foreign sources. The amount is four hundred and twenty thousand three hundred and fifty eight crores. Bangladesh's foreign debt rate is thirteen percent of GDP. So it seems that there is no reason to worry for now. Because according to the IMF, this rate of more than fifty percent means great danger.


However, from the example of Sri Lanka, experts believe that Bangladesh should be careful in some cases. Experts have pointed out the decline in export earnings as one of the reasons for this crisis. At present, Sri Lanka's export income is 8.5 billion dollars, while Bangladesh's export income is 38.75 billion dollars, that is, Sri Lanka's export income is almost five times more than Bangladesh's. As of March 2022, Sri Lanka's reserves are two billion dollars, while Bangladesh's reserves are forty-four billion dollars. At present, the amount of reserves of Bangladesh is about twenty-two times more than that of Sri Lanka. Sri Lanka's agricultural production has decreased due to the introduction of organic agriculture. But Bangladesh is gradually becoming self-sufficient in food production. Sri Lanka's development projects built with foreign loans are of no use to the people of that country. But the people of this country are directly benefiting from the development projects of the Bangladesh government. Padma Bridge, Lebukhali Bridge will change the face of the southern region in the next few years. It can be said with certainty that projects like Cox's Bazar Airport will contribute significantly to the country's communication system and economy.

Sri Lankan workers have lost their jobs and returned to their country during the corona virus. But the opposite happened in Bangladesh. Our remittances have hit a record high during the Corona crisis. Although the mega projects of Bangladesh are people-friendly, contemporary and sustainable, some things must be kept in mind from now on. Before undertaking any future infrastructure project, the need, public welfare and economic viability of the project should be taken into consideration. At present, the rate of foreign debt in Bangladesh is well below the IMF's declared danger level. So at the moment, Bangladesh is in a safe position in terms of debt repayment. However, Bangladesh can learn several things from Sri Lanka. Bangladesh will no longer get low interest loans after leaving the low-income countries in 2026. The liability will increase with high interest loans. So from now on be careful about the debt liability. Besides, the prices of daily necessities are increasing due to inflation. Which has a direct impact on civil life. A little attention will be paid to these matters very soon. Bangladesh now spends more than foreign exchange income. It reduces foreign exchange reserves. Reserves will also be strained if import costs increase. In this, the opportunity to spend reserve money on infrastructure projects will be reduced a lot. All in all, the pressure on the economy will increase. For this reason, experts have said to be careful about spending money on big projects, debt repayment and overall economic opportunities. Sri Lanka is in this limitless danger today because there was no warning. However, taking everything into consideration, Bangladesh's GDP amount, export income, foreign currency reserve remittances and other indicators of the economy, it can be said for sure that Bangladesh's situation is very unlikely to be similar to Sri Lanka's. Citizens of Sri Lanka have been victimized by their government's wrong decision and corona which is unlikely to happen in our country for now. However, the face of the country can change at any time in the way the ministers are smuggling money out of the country. The economy may collapse. Bangladesh may go bankrupt very quickly. Time will tell.



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