Wise people learn from the mistakes of others and fools learn from their own mistakes. Bangladesh should be cautious at the moment in view of the current consequences of Sri Lanka and the possibility of more dire consequences. At one time in Sri Lanka only the voice of ‘development’ could be heard. They dreamed of groundbreaking improvements in everything from infrastructure to science, industry, energy, trade, shipping and aviation.

In the name of development, with the help of financial aid from home and abroad, especially with the help of China, on the one hand, there has been development of huge projects, on the other hand, there has been widespread corruption and looting. Their ambitious unnecessary projects, excessive borrowing, defaulting on loans, abrupt tax cuts, the Corona effect, one of the major sources of national income, catastrophe in tourism and remittance sector, forced organic farming, crisis management mismanagement, corruption and nepotism.

Sri Lankan President Gotabaya Rajapakse’s residence in protest in protest of food, oil and electricity, in front of the residence of Sri Lanka, the police police has issued a curfew. The current situation in Sri Lanka, known as the ‘Jewel of the Crown’, has now reached a point where there is no electricity for 13 hours a day; The crisis over oil, food and medicine has exacerbated public unrest in the country. The dam of human patience is breaking day by day. Protests and tensions are spreading. Violence is on the rise, fires are burning. Banks are empty, shops are empty, shopping malls are depopulated – the crisis is so great that they have no electricity, no fuel, no food at home; What was there is gone. Necessary products like baby food are already finished. Even standing in a long line, the price of what is available is skyrocketing. What is coming in the local market, the common man is not able to touch it due to inflation.

Sri Lanka is now in the throes of a severe foreign exchange crisis, which is wreaking havoc on the country’s economy. While Bangladesh’s foreign exchange reserves are 48 billion, their foreign exchange reserves are less than  2 billion. In the wake of the foreign exchange reserves crisis, food, energy and medicine prices in Sri Lanka are skyrocketing, and stocks of these products are running out. The government says it has sought financial assistance from the International Monetary Fund (IMF) to avoid bankruptcy. It has also sought new loans from India and China. When Gotabaya Rajapaksa was elected president in November 2019, the new administration was expected to make a positive difference in the country, but the situation has worsened due to a number of policy flaws in the government.

The Gotabaya government granted an unsolicited tax exemption for income tax and value added taxpayers. This has resulted in a shortfall of Rs 50,000 crore in revenue, which has resulted in a loss of about 4 per cent of the annual GDP. Government efforts to convert Sri Lankan agriculture into organic farming overnight have resulted in severe losses in production. Where agricultural products are supposed to be exported, Sri Lanka, on the other hand, is being forced to import rice as its main food even in the midst of a severe foreign exchange crisis.

So far, both the central bank and the commercial bank in Sri Lanka have somehow survived by relying on short-term foreign loans. The government’s borrowing from the central bank and commercial banks has resulted in a huge drop in revenue. In the next 25 months from December 2019, the amount of loans taken by the government from banks stood at 4 lakh 20 thousand crore rupees. In other words, the amount of government borrowing has increased by 183 percent in these 25 months. As a result, the banknote reserves have been increased by 40 per cent to Rs 3 lakh crore. On the one hand, it has reduced the foreign exchange reserves, on the other hand, it has increased the domestic inflation. Foreign exchange reserves were 600 million in December 2019. By the end of February 2022, it had dropped to just ০ 2.3 billion.

If the total foreign debt of the central bank is adjusted, the amount of its negative debt will be  3.2 billion and the total debt of the commercial bank will be 2.8 billion. Despite its debt burden, Sri Lanka has an obligation to repay  6.9 billion in foreign debt over the next 12 months.

However, in this situation, India has come forward in the disaster of Sri Lanka. A ship carrying 40,000 tons of diesel has arrived in a Sri Lankan port from India. The assistance was provided under the 1 billion loan limit announced by India for Sri Lanka, which is in financial crisis. Meanwhile, Indian traders have started loading 40,000 tonnes of rice on another ship to be sent to the country.

The United States has imposed sanctions on some Sri Lankan officials for alleged human rights abuses. There are many issues that are compatible with Bangladesh. So if we are careful now, we will not have to face such consequences.

Major (Retd.) Reza Ul Karim, EB: Security and International Relations Analyst

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