Sri Lankan Prime Minister Ranil Wickremesinghe told the people of Sri Lanka few weeks back, that he will fulfil the promises he had made to them when he assumed office after the fall of the Mahinda Rajapaksa Government.
In his first TV address after assuming office, Wickremesinghe listed the grave challenges ahead of him, but assured the people of his determination to meet them successfully. He also suggested the formation of a National Assembly comprising all parties, to arrive at solutions. There may be an example for him. He can Overcome the crisis by following Bangladesh’s ‘PM Sheikh Hasina Model’. Now the question is why and how.
The South Asian Island nation of Sri Lanka is currently going through an extreme economic crisis. Foreign exchange reserves have fallen so low. In addition to cooking gas, there has been a shortage of kerosene and petrol.
The situation is so dire that due to inflation, high unemployment, and shortages of almost all necessities, many Sri Lankans are fleeing their country in the hope of a better life abroad. Countless Sri Lankans are now being forced to do something other than their main occupation as not everyone can afford to leave the country. The country has never been in such a bad situation since Independence in 1947. To cope with the situation, the Sri Lankan Government has asked for a new loan of US$ 1.5 billion from neighbouring India. When Sri Lanka faced problems, Bangladesh provided US$ 250 million for the first time. This was the first loan from Bangladesh for any country. They have again asked for a loan from Bangladesh. Besides, they have been repaying loans of different countries through the exchange of goods.
Foreign Exchange Reserves
Sri Lanka was quite capable of human resources and internal prosperity. Then why their situation? Sri Lanka has undertaken several mega projects in their country for more than a century. These include seaports, airports, roads, and other projects that are currently considered unnecessary and redundant. Different governments of Sri Lanka have taken loans from different sources at home and abroad. As a result, their foreign exchange reserves gradually ran out. Instead of foreign investment, various governments have focused on borrowing.
The country’s government has issued sovereign bonds since 2007 to raise money. This type of sovereign bond is sold when the expenditure is more than the income of a country. Such bonds are sold in the international capital market to raise money. That is what Sri Lanka has done.
The once-self-sufficient country is also in dire straits due to tax cuts, reduced income from tourism remittances, and unplanned decisions in agriculture. Different countries including Bangladesh have to learn from this situation. The world economic situation has begun to change rapidly since the Russia-Ukraine war, at which time any country could fall into a new crisis.
We are hopeful that friendly Sri Lanka will soon be able to return to normalcy with the help of various countries and organisations around the world.
On the other hand, Bangladesh is currently a wonder of development. It is Hasina’s contribution that has made a least developed country such as Bangladesh a developing country now, going by economic indicators. Sheikh Hasina changed Bangladesh from a basket case to a middle-income country. Strong leadership is one of the main reasons behind ‘Bangladesh model’.
The implementation of big projects is now just a matter of time. City facilities have also been ensured in the villages. A Metrorail will be launched in a few days. The long Padma Bridge is not a dream now, it is real. The implementation of such a project with the government’s own funding was at one time unimaginable. The country is moving forward with a sound plan.
On various indicators of human development, Bangladesh had shown significant improvement,” she said, adding, “Life expectancy in 2019 was 72.6 years, a gain of over 7 years since 2000, years of schooling were up from 4.1 to 6.2, and the country's human development index value climbed from 0.478 in 2000 to 0.632 in 2019. As a result, Bangladesh's index ranking is now 133rd out of a total of 189 countries.”
Bangladesh's growth stems largely from its success as an exporter of readymade garments, which account for 83% of its total exports, and remittances from overseas, which amount to over 7% of GDP. However, the principal driver of growth is investments, which has risen from 24% of GDP in 2000 to 32% in 2019. When asked about Bangladesh's amazing rise and economic growth.
During the COVID-19 pandemic, the government offered a 2% incentives bonus for Bangladeshis sending remittance back to the country, creating US$ 2 billion to keep the growth going. In addition, the Bangladesh Government under Prime Minister Sheikh Hasina provided an exponential stimulus to the economy to protect the marginal fringes of the workforce. She also highlighted that completion of the Padma Bridge will make a huge contribution to the economy.
Bangladesh’s economic success
Nobody disputes the economic credentials of Sheikh Hasina’s government - the Asian Development Bank (ADB) is the latest member of a growing list of international institutions attesting to Bangladesh’s economic success. The ADB ranked Bangladesh as the fastest-growing economy in the Asia-Pacific region, eclipsing China, Vietnam and India. At the same time, our improvements in many socio-economic indicators are another object of envy to our neighbours.
When she returned to power in 2009, Sheikh Hasina knew that the energy shortage first needed to be mitigated to a tolerable extent, before embarking on long-term plans. As a temporary measure, she decided to allow private companies to build small-range power plants, known as quick-rental power plants. The decision received a barrage of criticism from many quarters — from opposition parties and economists to the press and think tanks — intimidating many in the bureaucracy.
But Sheikh Hasina refused to back down from what she thought was the right step forward. She defended her decision forcefully, making necessary amendments to clear any legal ambiguity, and focused on its implementation. Nearly 10 years on, no one doubts that the decision was instrumental in solving the persistent energy crisis.
While in power, Sheikh Hasina has opened up many sectors traditionally reserved for the public sector to the private sector, including health, banking, higher education, TV and even export processing and economic zones. At the same time, her government has substantially widened and expanded welfare programmes to lift the poorest and most neglected section of the population and increased subsidies for other crucial elements of the economy such as agriculture. Her development philosophy is a blend of capitalistic and socialistic virtues.
Premier Sheikh Hasina has achieved full potential to move from a least developed country to a developing country. It has been possible because of people’s hard-working, strong leadership. Political stability, the flow of FDI, empowerment of women, unique poverty alleviation model, inclusivity of economy, etc. That is the story of a South Asian country: ‘Bangladesh’ is a ‘miracle story’.
(The writer is based in Karnataka, India, and has completed a master's degree from Jawaharlal Nehru University in International Relations. He is a researcher, Bangladesh studies, strategic and international affairs analyst. He can be reached at [email protected])
- Khmer Times
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