Amid renewed fears and debate that Bangladesh may face the same fate as Sri Lanka and Pakistan following its growing inflation and a major energy crisis, the country of 165 million is nowhere near reaching the “danger zone".
Many experts have come up with explanations in mass and social media, highlighting the key factors still working in Bangladesh’s favour despite the global crisis.
Prime Minister Sheikh Hasina has repeatedly been clarifying the situation. Even in early September, she strongly dismissed such concerns in her interview with ANI.
"Our economy is still very strong. However, we faced this Covid-19 pandemic, now the Ukraine-Russia war. That has its effect here. But in debt rate, Bangladesh always pays all the debts on time. So, our debt rate is very low. In the context of Sri Lanka, our economic trajectory and development…it is (planned) very, very calculative," she said.
Indian researcher and analyst John Rozario, in an article run by the Bangkok Post on August 1, also brushed aside the potential risk as “the Bangladesh government has already adopted an austerity policy to deal with the situation".
Even US Ambassador to Bangladesh Peter Haas on May 31 brushed aside such speculations, saying: “…The country (Bangladesh) has been exceedingly careful with whom it would borrow money and under what terms."
Over the years, Bangladesh has emerged as an aggressive nation in terms of economic growth, popularity and borrowing money from foreign sources for different development projects.
Often dubbed as massively responsible for the ongoing economic collapse in Sri Lanka, China offered a significant chunk of loans to Bangladesh, which also took loans from the US, Japan and Korea, among other countries.
The reality about Bangladesh, however, is that it is not relatively in the same situation as Sri Lanka has been. In fact, it is far from it.
According to analysts, Bangladesh is the opposite of any nation that will go through the trouble of paying its debts.
At the end of the last fiscal year, Bangladesh’s debt-to-GDP (gross domestic product) ratio hit an 18-year high of 38%, whereas the figure for the island nation stood at 109.3%.
Bangladesh’s external debt saw a four-fold rise to $60 billion last year, up from $15 billion in 1995.
The country's alarming debt figure is false or somewhat misleading as its annual economic output is far higher than its external debt by a large margin, according to analysts.
Bangladesh’s GDP is about the size of the Pakistani and Sri Lankan economies. Bangladesh’s foreign currency reserves hover around $40 billion, more than twice the $18bn of Pakistan and Sri Lanka.
Moreover, Bangladesh has a higher per capita GDP than India, outperforming other major South Asian nations in key socioeconomic metrics.
According to analysts, Bangladesh’s debt hike over the years is “perfectly normal” as every country, especially those vying to become fast-growing nations, will need these instruments (financial indicators) to become so.
Facts have proven time and again that the so-called “China debt trap” is nothing but a narrative trap designed with ill intentions to disrupt and undermine China’s mutually beneficial cooperation with other developing countries, according to a Chinese spokesperson.
In an August 9 Financial Times report, Finance Minister AHM Mustafa Kamal claimed that Beijing needed to be more rigorous in evaluating its loans amid concerns that poor lending decisions risked pushing countries into debt distress.
However, in a rejoinder over the news article, it was said that he was in no way warning about Chinese loans.
"To be clear, Bangladesh owes approximately $4 billion to China - a trifling amount compared with Bangladesh's gross domestic product of $416 billion, and its external debt of $51billion (2021 figures)."
Bangladesh's public debt-to-GDP ratio was well below the danger threshold, the International Monetary Fund (IMF) said on September 19, making it eligible for more foreign loans.
Experts at the time said it was possible to accelerate development by increasing the amount of loans from abroad as the debt repayment pressure is at a bearable level.
