The downslide in the wake of the price spiral and war over Ukraine not only affected Pakistan, but another one is down as Bangladesh has moved to the International Monetary Fund, in a desperate attempt to ward off balance of payments. Dhaka apparently is eager to seek a credit line of $4.5 billion as its forex reserves take a dip. It says that the rising energy prices and a power outage at home, coupled with monsoon flash floods has impacted its economy adversely.
The regression owing to regional upheavals is in need of being studied, as Bangladesh is just a recent addition to a long list of Asian states who are at the brink of disaster. From Sri Lanka to Pakistan, and from Nepal, Maldives, Afghanistan to India, the problem is how to keep their currencies stable in the backdrop of dollars’ surge.
The unprecedented increase in fuel and food prices, and the inability to cut non-developmental expenditures in many of these developing countries is taking them down. The war in Ukraine has simply doubled the jeoprady of Bangladesh and forced it to knock the door of the international lender.
Bangladesh’s slide is quite unfortunate. Governmental estimates say the country will lose around $10 billion in reconstructions as it overcomes climatic destruction. Moreover, the critical slump in exchange rate, as well as reserves from $45 to $39 billion within weeks, is alarming.
The country, likewise, witnessed a gradual decrease in the inflow of remittances owing to pandemic constraints and the ever-changing mosaic of the job market in the Mideast. Is the IMF option viable? The conditionalities that the Washington-based donor will impose on the South Asian state will be hard to bear and, moreover, act as a stumbling block on the path of self-reliance that the country has successfully been treading for years.