Bangladesh is suffering due to the problems of other countries
Mohammad Sharif’s factory was a model in many ways. His factory is spread over three floors of a building in Ashulia near Dhaka, the floors are quite spacious. Thousands of young people work in this factory. They are always ready to fulfill any half fashion needs of any country in the world.
Lately there has been a problem. That is power shortage. Load shedding has started from July to deal with the power shortage in the country. Along with this, the prices of almost all types of fuel have increased by 42 to 51 percent. In this reality, due to the lack of electricity, the factory workers of the Sharif government have to sit quietly for a period of the day. Due to the increase in the price of diesel in the market, the Sharif government cannot even dare to run the factory with diesel.
In a report of the London-based Financial Times newspaper, the image of this factory of the Sharif government has been published. Sharif Sarkar told the Financial Times, “If the price of everything in the market increases like this, the garment sector will become unstable and ultimately the workers will have to bear the burden.”
Bangladesh was once one of the poorest countries in the world. But Bangladesh has progressed a lot in the hands of other factories including ready-made garments. Bangladesh is the world’s third largest exporter of ready-made garments after China and Vietnam. With this, poverty has been eradicated. Not only that, Bangladesh also has many significant achievements in social and educational indicators.
But Bangladesh, like other South Asian countries, is currently struggling with rising energy and food prices. There is the impact of covid-19, along with the rise in prices of everything in the world market after Russia’s attack on Ukraine. This has increased the import cost of Bangladesh to a large extent. As a result, Bangladesh’s debt repayment capacity has declined.
According to the report, overall situation in South Asia is not very good. Sri Lanka is officially in default. The situation in Pakistan is also very bad. These two countries are demanding loans from the IMF.
Bangladesh is relatively protected
In May this year, Sri Lanka became the first Pacific country to default on debt in two decades. Public protests against the ruling political party in the country took such a shape that former President Gotabaya Rajapakse had to flee the country. Pakistan’s former president Imran Khan also had to step down through a vote of no confidence. Their currency has depreciated a lot. They continue to negotiate loans with the IMF and other adversarial donors to avoid default. Two small South Asian countries, Nepal and Maldives, have been left vulnerable to global high inflation.
According to the report, the position of Bangladesh is much better than other small countries in South Asia. According to a Financial Times report, Bangladesh has the lowest debt-to-GDP ratio among South Asian countries at 39 percent, although the government says it is even lower. Apart from this, the IMF recently said that Bangladesh is not in a critical situation, but there is great uncertainty due to the global economic situation.
The main tone of the Financial Times report is that Bangladesh has been doing well in macroeconomic management for so long but has recently fallen into some kind of uncertainty due to the global situation, for which Bangladesh is not directly responsible. It has been said that for so long Bangladesh was somehow protected economically due to the special craft of the export sector. But South Asian countries including Bangladesh are highly import dependent in terms of energy. Bangladesh is naturally in danger due to the increase in the price of fuel oil in the world market. However, Bangladesh is in a better position than other vulnerable countries in South Asia.
The future of Bangladesh is stable
Meanwhile, global credit rating agency S&P Global Ratings released Bangladesh’s credit rating on Thursday. In the report, they said that the economy of Bangladesh is currently under pressure from the external sector, but the situation will stabilize within the next one year.
S&P Global Ratings rated Bangladesh’s credit rating. The debt is rated BB minus for long term and B for short term. They made the same prediction in 2021 as well.
They said external sector challenges have put pressure on Bangladesh’s current account and foreign exchange reserves. Apart from this, Bangladesh’s net external debt situation has weakened. If commodity prices remain high for a longer period of time and demand for imports remains high, the currency may depreciate further. This may lead to further deterioration of the external sector of the economy.
The S&P expects Bangladesh to overcome pressures and challenges in the external sector of the economy over the next 12 months. However, S&P may downgrade the credit rating if Bangladesh’s external debt and financial sector conditions deteriorate.