Dhaka, Bangladesh-Only a week after introducing a planned outage in response to rising fuel costs in Bangladesh, the government is seeking help from the International Monetary Fund and two other countries in South Asia. He said he has been seeking help in the last few months.
Government officials said the country’s foreign exchange reserves were inadequate. This issue has led both Sri Lanka and Pakistan to seek IMF support.
“You can’t print dollars. Bangladesh Treasury Minister AHM Mustafa Kamal said Wednesday.” We earn dollars through the efforts of people who work or do business abroad. They are us. Is the driving force of the economy. “
Concerns over a global recession have plunged both money sent and exported by Bangladeshi people living abroad.
High inflation caused by Russia’s invasion of Ukraine has hit developing countries whose economies are powered by imported fuels. As the trade deficit grows, the government is struggling to secure enough foreign exchange reserves to import increasingly expensive diesel, gasoline and cooking gas.
In Sri Lanka, where drivers have to wait in line for days to refuel, the government defaulted in April, causing a crisis leading to the expulsion of the president this month. Observers fear that other countries may face similar turmoil.
“The Sri Lankan government collapsed first. US Agency for International Development Secretary Samantha Power said Wednesday at a conference on the global food crisis in New Delhi.” If history is a guide, the Sri Lankan government We know that we won’t fall in the end. “
Nepal, one of the poorest countries in the region, has not fully recovered from the pandemic impact of global inflation and the decline in Everest tourism, further depleting its foreign exchange reserves.
The Nepalese government spends about one-fifth of its budget on imported diesel, gas and other petroleum products, raising debt to India, its only source of fuel, to dangerous levels.
Government fuel rations are making consumer prices even higher.
Rajendra Taman, a taxi driver in the capital Kathmandu, said fuel prices have almost doubled since a year ago.
“When fuel prices go up, everything from tea to clothes to travel goes up. Food prices go up. Rents go up,” he said.
“But my income is declining. People refuse to take a taxi unless there is an emergency,” he added.
Similarly, in India, the growing deficit is depleting foreign exchange reserves.
The country’s foreign exchange reserves have shrunk $ 7.5 billion Weeks ending July 15 were more than 6% less than at the same time last yearAccording to central bank data.
India continued to import cheaper Russian oil and sought to tackle the problem by banning wheat exports. This is a measure that prevents countries from experiencing the rarity that affects neighboring countries.
However, inflation is beginning to be felt.
India’s parliament was shaken by this week’s protests after opposition leaders demanded discussions on rising food prices. On Tuesday, Rahul Gandhi, the opposition leader of the Indian National Congress, was temporarily detained after protesting outside parliament against rising prices and unemployment.
Pakistan reached a preliminary agreement with the IMF this month to revive a $ 6 billion bailout program on the brink of a balance of payments crisis.
The deal lasted months after Pakistan’s Prime Minister Shabaz Sharif introduced rigorous economic measures to meet IMF demand, including higher electricity prices, higher fuel prices and the abolition of government subsidies. Breaking the deadlock.
These moves, suffering from the crater economy, currency depreciation and double-digit inflation, have prompted public protests and deepened the country’s political crisis.
Other South Asian countries reported a sharp economic downturn in 2020, but Bangladesh was outliers. Its strong export garment industry, the second largest in the world, has helped sustain economic growth.
However, the invasion of Ukraine and soaring commodity prices have proven to be greater challenges.
The government launched rolling blackouts last week and shut down diesel power plants indefinitely due to the high cost of diesel. He also ordered gas stations to close at least once a week.
Soaring fuel prices are declining the rate of return on the garment industry.
Showkat Osman Heera, manager of Bangladeshi garment maker Lyric Industries, said frequent power outages mean that diesel generators need to be used to keep the assembly line up and running.
“Before the recent power crisis, we needed 100-150 liters of diesel a day, and now we need more than 1,000 liters,” Heera said. “I haven’t missed a shipment yet, but if this situation continues, it can be really annoying.”
Finance Minister Kamal said last week that Bangladesh did not need IMF assistance and downplayed the country’s economic vulnerabilities. He didn’t explain his face on Wednesday.
Rashed Al Mahmud Titumir, Dean of the University of Dhaka’s Department of Development, said the country is facing a difficult situation.
“Bangladesh’s economy has recently been hit by two external shocks: the Covid-19 pandemic and Russia’s invasion of Ukraine,” he said. “Bangladesh has little ability to withstand or absorb this kind of external impact.”
Saif Hasnat reported from Dhaka, Bangladesh, and from Emily Schmall, New Delhi. The report was contributed by Karan Deep Singh in New Delhi, Christina Goldbaum in Sacramento, and Bhadra Sharma in Kathmandu, Nepal.
