![]() The Metro Rail project ballooned to $3.3 billion from its original estimate of $2.1 billion. The ambitious nuclear power plant is costing Bangladesh $12.65 billion, and the actual amount to be spent will not be known until it is commissioned. Padma Bridge, one of the largest projects in the country, cost about $3.6 billion, which was previously estimated to be $1.16 billion in 2007. These projects include the Padma Bridge, a nuclear power plant in Rooppur, Dhaka City Metro Rail, and Karnaphuli Tunnel, to name a few. Since coming to power in 2009, the Hasina government has undertaken several large infrastructure projects funded by various countries and multilateral agencies. Waste of resources in the energy sector.Crisis in the banking sector due to widespread default of loans.High cost of infrastructure projects, often described as “mega projects”.What, then, prompted Bangladesh’s economic and financial crisis?Įxternal factors notwithstanding, four domestic areas tied to government policies can be identified as sources of the present crisis: This information reveals two things-that the fallout from the pandemic should have been addressed in the past year with significant support from external sources, and that the government has been taking loans in recent years despite claims of robust economic growth. The government also offered various stimulus packages and repeatedly claimed that its economy not only turned around, but was on the road to a dramatic recovery, with such optimism echoed by the World Bank.It obtained sixty-one million doses of COVID-19 vaccines from the United States, free of cost.Dhaka received $732 million from the IMF as a balance of payment support and $1.4 billion from the World Bank to implement the countrywide vaccination program.It is reported that budget support received from various multilateral agencies between 22 amounted to $5.8 billion.Bangladesh received at least $1.7 billion in loans from multilateral agencies by June 2020, and by October 2021 it had borrowed at least three billion dollars from development partners as budget support to combat the adverse impacts of the pandemic.The following statistics paint a far more worrisome picture: The journey can tell us where the solution liesĭhaka would like everyone to believe that the economic slowdown from the COVID-19 pandemic and the global impact of the Ukraine-Russia war are to be blamed for its current plight, but this only tells part of the story. ![]() Besides requesting from the World Bank a one billion dollar loan, an estimated $2.5-3 billion have been solicited from several multilateral agencies and donor nations (such as the Japan International Cooperation Agency, or JICA) just this year.įurthermore, considering that ongoing austerity measures including power cuts, restricted use of foreign currency, and fuel rationing are yet to make any major dent in the crisis, the government’s claim-that the country will weather shrinking foreign exchange reserves, a growing trade deficit, record inflation, daily depreciation of the local currency, and an intense energy crisis-is doubtful. As the IMF and other multilateral agencies open their purses to Bangladesh, it is also imperative to understand how the country arrived here. Huge financial woesĭhaka’s search for financial support is not limited to the IMF. This could not be further from the truth. The government claims that its request for “budget support,” an unrestricted loan with low interest which allows it to use the money as it wishes, is a preemptive measure and that the economy is not, in fact, in trouble. Bangladeshi Prime Minister Sheikh Hasina’s government-for years- touted the economic success of the country and recently celebrated the opening of Bangladesh’s largest bridge as a symbol of its self-reliance. While the economic crises in Pakistan and Sri Lanka were widely reported in international media, Bangladesh’s situation flew under the radar for quite some time thanks to the government’s repeated denial of any impending crisis. ![]() It is the third country in the region, after Sri Lanka and Pakistan, that knocked on the door of the IMF in recent months. The International Monetary Fund (IMF)’s willingness to support Bangladesh’s request for a $4.5 billion bailout package over the next three years confirms that the country’s economy is facing a serious crisis.
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