The downslide in the wake of the price spiral and war over Ukraine is toiling. Bangladesh, in a desperate attempt to ward off balance of payments, is knocking at the doors of IMF. Dhaka apparently is eager to seek a credit line of $4.5 billion as its forex reserves take a dip. It says that the rising energy prices and power outage at home, coupled with monsoon flash floods has impacted its economy adversely. This phenomenon is quite unnerving as Dhaka had consolidated its economic base and was one of the rising Southeast Asian performers.
The regression owing to regional upheavals is in need of being studied, as Bangladesh is just a recent addition to a long list of Asian states who are at the brink of disaster. From Sri Lanka to Pakistan, and from Nepal, Maldives, Afghanistan to India, the problem is how to keep a lid on their respective currencies in the backdrop of dollars’ surge. Unprecedented increase in oil and food prices, and the inability to cut non-developmental expenditures in many of these developing countries is taking them down. The war in Ukraine has simply furthered the envelope with a firm warning that until and unless an alternate source of energy is found, economies will remain in a state of volatility.
Bangladesh’s slide is quite unfortunate. Governmental estimates say the country will lose around $10 billion in reconstructions as it overcomes the climatic destruction. Moreover, the critical slump in exchange rate as well as reserves from $45 to $39 billion within weeks is alarming. The country, likewise, witnessed a gradual decrease in the inflow of remittances owing to pandemic constraints and the ever-changing mosaic of the job market in the Mideast. Is the IMF option viable? The conditionalities that the Washington-based donor will impose on the South Asian state will be hard to bear and, moreover, act as a stumbling block on the path of self-reliance that the country has successfully been treading for years.
Published in The Express Tribune, July 28th, 2022.
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