Bangladesh warns against becoming like Sri Lanka by taking Chinese loans

Bangladesh has warned developing countries not to become like Sri Lanka by taking loans from China.

Bangladesh’s Finance Minister AHM Mustafa Kamal has warned that developing countries must think twice about taking more loans through China’s Belt and Road Initiative as global (BRI) inflation and slowing growth add to the strains on indebted emerging markets, the Hindustan Times reported.

In an interview to Financial Times, Kamal also said China needed to be more rigorous in evaluating its loans amid concern that poor lending decisions risked pushing countries into debt distress. Pointing to Sri Lanka, where Chinese-backed infrastructure projects that failed to generate returns had exacerbated a severe economic crisis, the finance minister said, “Whatever the situation [that] is going on worldwide, everybody will be thinking twice to agree to this project (BRI).”

“Everybody is blaming China. China cannot disagree. It’s their responsibility,” he added.

He also said Sri Lanka’s crisis highlighted that China had not been rigorous enough in deciding which projects to support. It needs to “make a thorough study” before lending to a project, he said. “After Sri Lanka . . . we felt that Chinese authorities are not taking care of this particular aspect, which is very, very important.”

Last month, Bangladesh became the latest Asian country to approach the IMF for financing as surging commodity prices after Russia’s full-scale invasion of Ukraine weighed on its foreign reserves.

The country, a participant in China’s BRI, owes about $4 billion, or 6 per cent of its total foreign debt, to Beijing.

Bangladesh is also seeking up to $4 billion more in total from a range of other multilateral and bilateral lenders, including the World Bank, Asian Development Bank, Asian Infrastructure Investment Bank and Japan International Cooperation Agency, Kamal said.

He added that he was optimistic the country would secure loans from them. His comments came as China’s foreign minister Wang Yi visited Bangladesh over the weekend for meetings with officials including Prime Minister Sheikh Hasina.

Sri Lanka, which defaulted on its sovereign debt in May, is in negotiations with the IMF for an emergency bailout. Pakistan, whose foreign reserves have fallen to enough for just a month and a half’s worth of imports, last month reached a preliminary deal with the fund to release $1.3 billion as part of an existing $7 billion assistance package.

Bangladesh has been hit hard by a rising energy import bill, with fuel shortages forcing daily, multi-hour power cuts. Its foreign reserves have also fallen to less than $40bn from more than $45 billion a year ago. However, analysts say the country’s strong export sector, notably its garment trade, has helped shield it from the recent global shocks and its reserves are still enough for about five months’ worth of imports, providing the country with some cushioning. This meant that although “everybody is suffering [and] we’re also under pressure”, Bangladesh was not at risk of defaulting like Sri Lanka, Kamal said. (Colombo Gazette)

2 COMMENTS

  1. You just can’t blame the lender while Sri Lankan politicians were only concerned about getting commissions on projects to create their own wealth and election victory. The Rajapaksas chosen their home town to build harbor and sports stadium to make sure that they continue to get votes to be in power. Why don’t you talk about India’s failures to support the development projects in Sri Lanka, Nepal, Pakistan? If Indians had a clue to develop South Asia, Sri Lanka would not have leaned on western powers and no need to create terrorism to destroy Sri Lanka. Why don’t you talk about the western power which created COVID 19 to undermine countries like Sri Lanka? The western powers deliberately targeted countries which have been part of the China’s belt and road initiative. Indians are laughing now, but they don’t realise how easily the western power will do the same to them.

    My message to the world’s majority whether you are a Chinese, Indian, African, South American, Arab etc…

    I am a citizen of a western country. I have a postgraduate studies. On top of that I spent most of my time in libraries. But the western powers make sure that nobody would write a sentence about my wisdom in a public forum. You are fooling yourselves, if you think that the western powers will allow you to rule the world. I still believe even Chinese do not fully comprehend the western powers as I do. I lived here more than three decades. Don’t you think that you are overly estimating yourselves if you think that you know about the western powers while living in Asia, Africa, Middle East and South America. You may say what about Kamala Harris and Sundar Pichai? They are going with the flow of yhe western powers. Did you ever come across Kamala Harris or Sundar Pichai talks about the Native Americans’ 3rd world lifestyle in their own country?

    • Sri Lanka is working closely with India and westen powers too. If it had committed to China, we could blame China for Sri Lanka’s failure. Non alliance will not help you to develop the country. I supported the Rajapaksas to eliminate the LTTE and encouraged to go with China to develop the country. But the Rajapaksas thought they are too smart by showing their heads to China, Tails to America and foot to India. Now the country is torn apart.

      The Rajapaksas and the other politicians behave like spoiled kids. They don’t listen to anyone. If China put pressure to do the right things, they go behind the western powers and India. Likewise, if the western powers put pressure to do the right things they go behind China. Do not blame others’ for Sri Lanka’s failure. Blame the foolish people and their corrupt leaders.

      I have a sister in Sri Lanka. She failed GCE O/L. I tried to push her to continue her studies but she never did any study to help herself and her community. When I pushed her to find a job she refused, including volunteer work. If I put pressure, she goes behind the others. Impossible to change her. This is how the whole country behaves, including politicians.

      They have sent Gotabaya Rajapaksa home. What about the government workers who work only four hours a day? What about the teachers who teach as little as possible at schools to make extra money from tuition classes? What about corrupt police and customs officers? What about corrupt media personnel? You cannot change the environment by having elections, bringing the same mindset but different faces. How many elections you had since 1948? Election will not fix the problem. A revolutionary leader has to be evolved with the people. We are talking about different concept. This will not happen through just having elections.

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