Why Sri Lanka’s collapse looms large over Bangladesh | Business and Economy

Dubbed by pundits as a improvement “miracle”, Bangladesh is slated for commencement from the standing of “Least Developed Nation” to “Growing Nation” by 2026.

But, abruptly, the nation finds itself battling comparisons with Sri Lanka, which has simply skilled an financial free-fall. Bangladeshi mainstream media and social media are flooded with speculations in regards to the nation’s impending collapse like its fellow South Asian nation.

Everybody from the prime minister’s workplace and teams of eminent economists to the American ambassador in Dhaka has chimed in to argue why they consider Bangladesh remains to be far faraway from a Sri Lanka-like cataclysmic implosion.

They could be solely partly proper.

Bangladesh’s GDP is in regards to the dimension of the Pakistani and Sri Lankan economies mixed. Bangladesh’s international forex reserves are $39bn, greater than twice the $18bn of these two neighbours collectively. In accordance with the finance ministry, Bangladesh’s whole debt-to-GDP ratio stands at simply over 31 p.c, in contrast with 119 p.c for Sri Lanka. Bangladesh has a better per capita GDP than India and is outperforming different main South Asian nations in key socioeconomic metrics.

Given the above backdrop, why are Bangladeshis involved about their nation sliding, like Sri Lanka, into an financial collapse?

The reply lies not a lot in financial statistics however in three key similarities between the nations which will have evaded the eyes of some exterior consultants. These are: authoritarianism underneath dynastic rule; corruption and cronyism; and debt-fuelled vainness tasks.

Just like the Rajapaksa household, the Sri Lankan political dynasty that steered the nation into its latest wilderness of despair, Bangladesh has been dominated for the previous 14 years by the Awami League celebration, led by the household of Prime Minister Sheikh Hasina. Whereas the Rajapaksas have been a minimum of democratically elected a number of instances – together with as just lately as in 2019 – Hasina returned to energy in 2018 through an election the place the nation’s safety equipment allegedly stuffed ballot boxes the evening previous to the vote. The ruling Awami League received 96 percent of the seats, a outcome as lopsided as is normally the case for the rulers of North Korea, Syria, and Cambodia.

Over time, each the Rajapaksas and the Sheikh household have drawn their political legitimacy from their much-fabled wartime management. In 2009, then-President Mahinda Rajapaksa and his brother, defence minister Gotabaya Rajapaksa, have been in cost when the Sri Lankan authorities decisively vanquished the Tamil Tiger guerilla fighters in Sri Lanka’s decades-old civil struggle. Likewise, Hasina’s father, Sheikh Mujibur Rehman, led Bangladesh’s struggle of independence in opposition to Pakistan half a century in the past.

Promoting their household’s wartime bravado to their impoverished and nationalistic viewers, each the Sheikhs and Rajapaksas established de-facto fiefdoms, the place nearly each dwelling member of their respective clans bought positions of energy.

The Rajapaksas ran Sri Lanka like a “household agency”. Earlier than the brothers’ rule crumbled final month, Gotabaya was president, Mahinda prime minister and their third brother Basil was a cupboard minister. Their kids additionally held ministerial positions – all concurrently.

Prime Minister Sheikh Hasina’s household in Bangladesh has adopted an analogous template, although much less formally. Her daughter Saima Wazed, seen by many as her heir-apparent, attends state features and conferences together with her mom. Sajeeb Wazed, the expatriate son of the prime minister, enjoys the title of ICT adviser, with de-facto oversight of the nation’s profitable digital expertise transformation. The prime minister’s sister Rehana, nephews, nieces, cousins and their kids are entrusted with key obligations starting from managing propaganda organisations, diplomatic and donor relationships, military affairs, parliamentary memberships and operating enterprise conglomerates.

Such management over the state equipment and personal companies invariably breeds autocracy and disrespect in the direction of public opinion and political opponents. That, in flip, spawns rampant corruption and cronyism. That’s what occurred with the Rajapaksas in Sri Lanka, the place protesters discovered opulence within the presidential palace at variance with the dire situations of the nation. That can be the truth in Bangladesh underneath the Sheikh household.

What about vainness tasks?

The Rajapaksas constructed a $1bn port that not often noticed any ships, a $210m airport the place hardly any planes landed and a 35,000-seat cricket stadium bearing Mahinda Rajapaksa’s identify that seldom hosted any video games. These are the poster kids of Sri Lanka’s debt-funded excesses that sank the nation.

Bangladeshis are actually busy evaluating their very own white elephants with Sri Lanka’s. Whereas the federal government has launched austerity measures, together with energy rationing, and police have fired upon – and even killed – these protesting in opposition to worth hikes, Bangladesh goes forward with the development of a $140m cricket stadium bearing the prime minister’s identify.

The Hasina authorities is busy developing a number of multibillion-dollar mega tasks, together with a $12bn nuclear energy plant in Rooppur, which is considerably costlier than comparable tasks in different nations. When the World Financial institution declined to fund Bangladesh’s just lately accomplished Padma Bridge, citing corruption, Bangladesh self-funded and accomplished the 6km (3.7-mile) lengthy bridge after spending thrice the preliminary price range ($3.8bn vs $1.2bn).

Inside a couple of month of opening the Padma Bridge amid a lot jubilation, the nation frantically wrote letters to the Worldwide Financial Fund, World Financial institution and Asian Growth Financial institution for loans to maintain the financial system afloat amid a stability of cost disaster because of rising oil costs.

It’s potential the federal government acted prudently by pre-emptively speaking to the lenders of final resorts. In spite of everything, the Bangladesh authorities should have seen in Sri Lanka what financial stress can do when an autocrat’s grand discount of “much less democracy, extra improvement” fails.

But it’s hardly shocking that the individuals of Bangladesh see eerie parallels with Sri Lanka, because the distinction between their dwindling private funds and the corruption-prone vainness tasks turns into sharper. Seeing the collapse of Sri Lanka’s debt-driven, dynastic authoritarianism, the Bangladeshis aren’t irrational of their fear: “Are we subsequent?”

The views expressed on this article are the writer’s personal and don’t essentially mirror Al Jazeera’s editorial stance.