Bangladesh is no Sri Lanka, economically

Economists however caution the use of debt.

Sri Lanka is in one of the biggest financial crises in history.

Many are already worried about Bangladesh’s foreign and domestic debt.

But at this moment, economists do not want to compare the economies of the two countries. 

However, they also advised being cautious with debt and taking lessons from the situation in Sri Lanka.

Prof Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue.

We can not compare Bangladesh’s economy with Sri Lanka. But we have to learn from their situation.

Even 10-15 years ago, Sri Lanka was one of the strongest economic powers in Asia.

But they undertook some big projects which I call white elephants.

At that time, economists also gave many warnings but they did not hear them.

And today, we can see their condition.

I think the policymakers of Bangladesh should also take lessons from Sri Lanka in adopting new plans or projects.

They must think about what the loan service will look like.

When will those projects be implemented, will there be any direct income from it or will it be used otherwise.

How much will be the interest on the loan, how much will be the interest rate and how many years will we get to pay the loan,he added.

However, the economist thinks that the main two indicators of Bangladesh’s economy are still in a good position in comparison. 

Bangladesh is still in a good position in two main indicators of debt management.

One is the outstanding foreign debt-GDP ratio and the second is debt servicing liability as a percentage of foreign exchange from export.

So, I don’t think it is fair to judge the economy of Sri Lanka and Bangladesh on the same scale.

Economist Zahid Hussain also thinks that Bangladesh’s debt has not yet reached the level of danger.

Quoting a 2010 study by the International Monetary Fund.

This former lead economist of the World Bank’s Dhaka office said.

According to the report, the debt-to-GDP ratio is 90% for developed countries and 60% to 65% for developing countries.

It still does not raise any concerns. Going beyond this may create fear or put us in a dangerous situation.

International lenders or financing organizations provide loans on the basis of these calculations.

So that they can repay the loan installments from the earning of the project or after its implementation.

The project can also enhance the national income.

Referring to Sri Lanka’s debt-to-GDP ratio of about 110%, Zahid Hussain said.

Sri Lanka, once the best economy in South Asia, has implemented mega projects in the political and personal interests of the country.

When asked if a situation like Sri Lanka could happen to Bangladesh.

The renowned economist Dr Debapriya Bhattacharya said that it would be irrational to compare Bangladesh with Sri Lanka.

I do not see the reason for such a situation as every country develops differently.

So, it is not logical to compare one with the other.

Regarding the percentage of debt in the context of Bangladesh’s GDP set by the IMF, Debapriya Bhattacharya said:

It is a matter of concern that Bangladesh’s total national debt is increasing at a faster rate than GDP.

According to his research, in 2021, Bangladesh’s total debt was $131.14 billion.

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