Economies of India's neighbors in turmoil Indian Subcontinent | Economies
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Economies of India's neighbors in turmoil

Bangladesh Live News | @banglalivenews | 08 Aug 2022, 09:57 am

Dhaka, August 8: The Ukraine war has created economic instability on the Indian subcontinent.

Pakistan, Sri Lanka rush to 'Bretton Woods' institution for bailout. Now Bangladesh is also asking for loans. After Colombo, Islamabad followed the same path. Islamabad is at risk of insolvency as foreign exchange reserves are gradually depleted.

Economic conditions in Myanmar, Maldives and even Nepal are also dire. Pakistan's army chief General Qamar Javed Bajwa has multiplied the initiative by urging the US to get an IMF loan soon. He has sought the assistance of US Deputy Secretary of State Wendy Sherman for this. Said his country was facing the risk of becoming a debtor. Therefore, he asked for Sherman's help to get the IMF to release the 150 million US dollar aid as soon as possible.

On the other hand, the World Bank is waiting for the policy framework from them before approving more relief to Colombo. At this time, Dhaka asked for a loan of 4.5 billion US Ddollars from the IMF. These things were said in a report published in India's online Hindustan Times. The report written by journalist Shishir Gupta used the word 'Bretton Woods'.

In this regard, Wikipedia says, Bretton Woods is a system of financial management. The United States, Canada, Western European countries, Australia and Japan establish trade and economic relations laws under it. Before this, the Bretton Woods Agreement was made in 1944.

The report also said that five months after Russia's invasion of Ukraine, the war shows no signs of ending. On the contrary, Moscow has taken an aggressive stance. They called for the overthrow of the Ukrainian regime.

Meanwhile, Russia has consolidated its position in many parts of eastern Ukraine. Meanwhile, Russia has cut gas supplies to the European Union by 20 percent. As a result, they are already feeling the cold. On the other hand, the sanctions imposed by the West do not show any political or economic heat on Moscow. This means the war will continue until Russian President Vladimir Putin's goals are achieved.

As a result, high inflation, rising crude oil prices and food shortages will continue. This will further increase the economic crisis. In short, India's neighbors in economic turmoil, as seen in Sri Lanka, can turn into political explosions.

The situation in Pakistan has reached such a point that its army chief General Qamar Javed Bajwa has sought the help of US Deputy Secretary of State Wendy Sherman. He urged Wendy Sherman to take steps to get the IMF to write off the 1.5 billion US dollar loan as soon as possible. Because, Islamabad is facing becoming a debtor. Especially with the increase in the price of the US dollar, their foreign exchange reserves are decreasing.

Reports suggest that General Bajwa called the US Deputy Secretary of State to lobby the Pakistani political leadership. Because, the IMF cannot take the initiative of Pakistani leaders so seriously. Since Pakistan's ousted Prime Minister Imran Khan Niazi had no chance of seeking help from the US leadership, Islamabad had no choice but to seek help from Washington.

On the other hand, Pakistan's close aide China is also not in a position to help them. Pakistan has taken at least 25 percent of its foreign loans from China.

About China, Gupta said that they want to turn the Indian subcontinent into a new East India Company. Another close friend of China is Sri Lanka. The World Bank has refused to refinance them until they provide a comprehensive macroeconomic policy framework. As a result, the situation there is getting worse.

In a statement, the World Bank said there is a need for radical reforms in the macroeconomic policy framework, which will focus on economic stability. It will also identify the root causes of what led to this economic crisis so that Sri Lanka's recovery is resilient and participatory. However, the situation in Dhaka is not so dire. But the difference between the government purchase price of one dollar from the bank and the purchase price of one dollar from the black market is 10 percent. This has led to economic depression.

The dollar has practically 'crushed' the Pakistani and Sri Lankan rupees. On the contrary, the Bangladeshi currency has maintained its position.

In this situation, Dhaka has asked for a loan of 4.5 billion US dollars from the IMF to control the increase in food and fuel prices. While the Indian and Nepalese rupees will not allow the situation in Nepal to get out of hand, its political leadership has realized why it is important to be fiscally prudent and not to boast of loans from China.

The situation is similar in Myanmar under the military junta. They are also suffering from an economic crisis. Maldives is not able to survive in the current recession.