First, it was the Covid pandemic which prompted prophets of doom like David Bergman to predict a million deaths. That did not happen. Bangladesh handled the pandemic well enough to get kudos from the likes of Nikkei Asia and World Health Organisations, outperforming many developed countries.
Whether it is the massive floods or the US sanctions, a similar ” Dhaka falling apart” narrative emerges every time there is a crisis.
The present clamour over Bangladesh seeking IMF support to cushion its economy against strong global headwinds is the latest case of the “Dhaka falling apart” narrative.
Bangladesh has just tried initiating negotiations with the International Monetary Fund on a new loan under the creditor’s Resilience and Sustainability Trust (RST). This loan it is seeking is not to pay outstanding import bills, as is the case with Sri Lanka or Pakistan. But all hell seems to be breaking loose.
RST-linked loans are clearly designed to help countries ensure sustainable growth putting the focus on challenges emanating from climate changes Krishna Srinivasan, director of the IMF’s Asia and Pacific Department, has clarified in an interview on Tuesday.
Bangladesh’s $416 billion economy is the first in Asia to put such a request forward to the Washington-based lender as it seeks to ramp up its attention on how to mitigate the impact of climate change. And at the same time, it is under no real pressure to scrounge forex reserves for paying import bills which have risen on the back of rising energy and food prices and in this case the country is in a better spot in comparison with countries across the world.
“The RST comes also with an (upper credit tranche) program, so it’s a joint initiative.
The amounts will have to be discussed subsequently,” Srinivasan told Reuters.
This means that Bangladesh will need a regular IMF-supported program such as a stand-by agreement or an extended fund facility to be able to get this new type of financing.
The trouble with Bangladesh’s chronic Doomsday prophets is they can not differentiate between a horse, a mule and a donkey. Hence Bangladesh, despite its phenomenal economic progress, is bracketed with Sri Lanka or Pakistan. Perhaps because that fits their regime change agenda.
“This RST facility is aimed at addressing transformational changes in countries, notably climate change and pandemic preparedness,” Srinivasan has said. “One would hope that other countries would also take advantage of this instrument.”
According to a recent study by the IMF and the global lender World Bank, Bangladesh’s foreign loan servicing is also no great cause of worry as it is well within the ambit of a safe zone.
It verges on an annual around $3 billion until it peaks at $5.15 billion in 2029-30 before starting to drop again.
It stood at $2.45 billion last year and has risen to $2.78 billion this year. At the current trend of foreign remittances, just over two months’ flow of remittances is good enough to pay the loans. The rest can be used to pay import bills.
Cutting down on power and fuel wastage are precautions the Hasina government, as a responsible administration, has adopted to improve fiscal discipline and curb needless imports. This is not proof of a panic handling of a burgeoning crisis but efforts to learn from others’ mistakes to avoid disasters and act prudently in advance.
And much to the dismay of those naysayers, Sheikh Hasina exposed the current state of key economic indicators— “we have reserves adequate to meet import prices of food grains and other non-essential items for three months the least”.
To cry wolf over such measures to cause public alarm and provoke unrest to try bring about regime change is the real agenda of the Doomsday prophets, most of whom are closely aligned to and bankrolled by the Islamist Opposition that seeks no election but a violent agitation to topple the government by force.
A government which has clearly delivered on economic and human development, like no other in South Asia and especially in the management of manifold crises ranging from Covid to climate change.
Writer: Senior columnist and author of “The Midnight Massacre ” on the 1975 Bangladesh coup