With the global economy struggling with inflation and shortage of fuel, there is an economic crisis in neighbouring countries like Pakistan, Bangladesh and Sri Lanka. So, let us further dive into the economic crisis of India’s neighbours.
Condition of the economic crisis of India’s neighbours:
Pakistan:
Pakistan’s Finance Minister has recently said that “bad days ahead” for the struggling nation. He said that their future looked grim because of the economic policies undertaken by the erstwhile Pakistan’s Tehreek- e- Insaaf under the aegis of Imran Khan.
He further accentuated Khan’s failure by claiming that the credit deficit of Pakistan had ballooned to $ 3500 billion. The credit deficit of the cash- striped country was $ 1600 billion under the rule of Pakistan Muslim League- Nawaz (PMLN) He also acknowledged the fact that no country could “grow” and be “stable” with that kind of cash deficit.
Meanwhile, he also discussed his short term and long term plans to save the economy. But for their help and intervention, Pakistan would have had a default situation just like Sri Lanka. The current government will control imports for the next three months as well as increase exports by suitable means.
Their import bill stood at $80 billion in the previous fiscal year while their export amounted to $31 billion. Pakistan’s currency saw an all time low against the United States dollars (USD) recently although with IMF intervention.
Tax base has been broadened as well as the IMF has stepped up to provide timely assistance. Pakistan is in a desperate need of an IMF loan.
Sri Lanka:
Sri Lanka is already a debt trapped country which saw vehement protests and shocking economic conditions over the last few months. The new President Ranil Wickmersinghe has said that Sri Lanka’s hardship will last at least for one more year.
In his recent two- day conclave, “Let’s Reset Sri-Lanka”, the President took examples from neighbouring countries like India and Bangladesh. He will focus on diversifying the economy as well as will focus on logistics. The major economic reforms will also need higher taxations in order to raise revenue.
The export industry has been badly hit due to fuel scarcity. Sri Lanka heavily depended on tourism which suffered a huge setback due to the worldwide pandemic.
The company is also looking to throw its caps into the nuclear energy sector amidst sky- rocketing fuel prices. He said that if they had surplus energy, then they could sell some energy to India. It was a time to think “out of the box.”
They have had an international debt default in April. So, they are negotiating with the International Monetary Fund (I.M.F) for a special bailout package. But the IMF has hit a snag. Moreover, the World Bank has also denied any help until a detailed macro- economic plan is presented.
In a country where about two-sevenths of the people are malnourished and unemployment is on a rise, more funds are being set aside for the downtrodden.
Bangladesh:
Bangladesh is one of the fastest growing economies in the world. But like a spot in a white shirt, Bangladesh has seen a colossal rise in inflation in recent times. Petrol prices have risen about fifty percent.
As per reports, Dhaka is seeking assistance from the World Bank and the International Monetary Fund (I.M.F)
Sheikh Hasina has written to both the lending organisations for an aid of $1 Billion. People familiar with the matter have reported that earlier this week, Bangladesh had knocked IMF’s doors for help of another $4.5 Billions.
Bangladesh is also looking to invest in developing technologies for climate change resilience as well as sustainability. In the meanwhile, USA has tapped in support for Bangladesh for its new ventures and long-term challenges.
