New Delhi: From providing India with Covid relief materials to extending financial help to Sri Lanka in its hour of crisis, Bangladesh has started to showcase its economic rise and use it to forge deeper ties with neighbours.
Earlier this week, Bangladesh agreed to extend a $200 million currency swap facility to Sri Lanka. This will help in boosting their economy even as it will enable Colombo to tide over the massive debt crisis it is facing at present, diplomatic sources told ThePrint.
The foreign debt situation of Sri Lanka is at a critical juncture leading to a massive balance of payment issues. Sri Lanka has reportedly $3.7 billion of foreign debt maturing this year, hence this cooperation from Bangladesh is expected to be a lifeline for their economy.
According to sources, the arrangement was finalised during Sri Lanka Prime Minister Mahinda Rajapaksa’s visit to Bangladesh in March this year.
A currency swap is a transaction in which two parties exchange an equivalent amount of money with each other, but in different currencies. It helps in reducing the cost of borrowing in a foreign currency at favourable rates.
Sri Lankan economy has been in deep trouble ever since the 2019 Easter bombings and subsequently the outbreak of the coronavirus pandemic that has wreaked havoc for its tourism industry and other sectors.
Bangladesh is also among the 40 countries that have sent Covid relief aid to India twice as the country battles the second wave.
On 18 May, Dhaka handed over 2,672 boxes of various anti-viral drugs and Covid protective gears to India. Prior to that, Dhaka had on 6 May sent 10,000 vials of Remdesivir to India.
Bangladesh, which is expected to register a GDP growth rate of 5.8 per cent this fiscal, has even come under the US’ radar due to its strategic location in the Indo-Pacific region.
In April this year, the US Chamber of Commerce launched the US-Bangladesh Business Council looking at the investment potential by American investors there, and also enhance two-way trade.
Prime Minister Sheikh Hasina-led Bangladesh government has also garnered praise from arch-rival Pakistan for its growing economic prowess.
“Every government in Pakistan, including the current one, has gone around the world with a begging bowl… It was unthinkable, 20 years back, that Bangladesh’s GDP per-capita in 2020 would be almost twice that of Pakistan. Bangladesh could be an economic powerhouse in 2030 if it grows at the same rate as in the past. If Pakistan continues its dismal performance, it is in the realm of possibility that we could be seeking aid from Bangladesh in 2030,” Abid Hasan, a former adviser to the World Bank for the Pakistan Program, said in an opinion piece in one of Pakistan’s leading national dailies.
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The new ‘Royal Bengal Tiger of Asia’
According to Prabir De, professor at the Research and Information System for Developing Countries (RIS), said the main reason behind Bangladesh’s economic growth is that it continues to reap benefits from the European Union’s Generalised Scheme of Preferences (GSP) programme and other trade preferences.
“It is due to this continuous support through the EU’s GSP scheme that Dhaka has been able to earn considerable revenues from strategic exports. Besides, Bangladesh does receive a good amount of remittances as well,” De said.
Mizanur Rahman, Commissioner, Bangladesh Securities and Exchange Commission, told ThePrint that Bangladesh’ forex reserves have reached $45 billion in 2021 from around $9 billion in 2010, while inward remittances have touched $200 billion.
“Bangladesh believes in behaving responsibly with its neighbours and reaching out to those who need their help. Dhaka is now looking at deeper integration with its neighbours while not undermining others,” Rahman said.
De added: “Bangladesh is the new Royal Bengal Tiger of Asia. They speak in one language across all spectrum and have well-structured governance.”
He also said Bangladesh is now doing trade with major ASEAN countries while it is also looking at having trade pacts with some of the ASEAN countries and joining connectivity projects.
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