Economic crisis in Sri Lanka: what can Bangladesh learn?
Speakers from Bangladesh and Sri Lanka discussed the current economic crisis in the island nation and highlighted lessons for South Asia, including Bangladesh, in a webinar today.
The webinar titled “Current Sri Lankan Economic Crisis: Lessons for Other South Asian Countries” was jointly organized by the South Asian Institute of Policy and Governance (SIPG) and North-South University ( USN).
Panelists from Sri Lanka were Channa De Silva, President of Sarvodaya Development Finance; Sulochana R Mohan, deputy editor of Ceylon Today; and from Bangladesh were Dr. Nazneen Ahmed, UNDP Country Economist in Bangladesh and Amb Shahidul Haque, Professor at NSU.
In her speech, Channa De Silva highlighted the root causes of the current economic crisis in Sri Lanka such as huge investments in unproductive development projects, governance issues, corruption, mismanagement of funds, huge tax cut in 2019 that resulted in a $3 billion loss. , 90% drop in tourist income due to terrorist attack and pandemic, drop in remittances, inflation and currency depreciation due to money printing rather than seeking help from the Monetary Fund International (IMF), and loss of 3 billion dollars of Chinese investments among others.
Sulochana R Mohan focused on the political economy and governance aspects of the Sri Lankan economic crisis. She said populist policies such as a ban on chemical fertilizers have led to lower food production and tax cuts have reduced revenue collection. And so many big projects without any return have instead increased external debts.
Dr. Nazneen Ahmed spoke about lessons for South Asia and Bangladesh from this crisis.
She highlighted the need to accurately estimate the demand for development projects as well as the gestation period of the project. She also opined that Bangladesh also needs to consider the possibility of a future increase in the borrowing rate as the country’s per capita income (PCI) rises in order to sustain economic growth.
Amb Shahidul Haque focused on foreign policy aspects and lessons for other South Asian countries from this crisis.
He said Sri Lanka has traditionally been a “theater of geopolitics” in the region.
He said a government should not experiment too much with foreign policy during unstable times such as pandemics, which may have contributed to Sri Lanka’s current situation.
The webinar moderator was Dr. Gour Gobinda Goswami, Professor, Department of Economics, NSU. Scholars, researchers, diplomats, journalists and students from home and abroad attended the webinar.