Currency swap with Bangladesh and critics | Sunday Observer

Currency swap with Bangladesh and critics

5 June, 2021
Prime Minister of Bangladesh Sheikh Hasina
Prime Minister of Bangladesh Sheikh Hasina

The recent currency swap with Bangladesh has been the subject of so much predictable lampooning and barely concealed scorn in both the traditional and the alternate media in this country.

A currency swap with Bangladesh, the basket case?

The innuendo has been so pathetic, as to be racist almost. If not racist, at least certainly bordering on revulsion towards one country, which is (quite erroneously) thought to be so inferior to ours.

Apart from this attitude being wrong at many levels, the fact is that it’s clearly ignorant. Those who keep making snide remarks about “borrowing from the basket case” aren’t aware of the fact that Bangladesh has a greater GDP per capita that even Pakistan, and is projected to overtake India soon in terms of this index.

With its huge population Bangladesh rode on the back of a huge demand for garments produced cheap, to reach this status of a rather healthy GDP, having of course been a country plagued by floods, famine and widespread poverty in the 70s.

Those who are derisive of Bangladesh should leave their stupidity aside for one moment and make sure that they learn something from the Bangladeshis. Sri Lanka certainly could learn a thing or two from the Bangla people and the way the country has become a big player as a regional if not global economy.


That part about being a big player is not an exaggeration. In GDP terms, Bangladesh is 41st in the world, which is extremely healthy because that puts the South Asian neighbour in the top bracket in GDP terms, not that far relatively from giants such as China and the US.

For a country that was languishing in terms of GDP and was indeed seen as a basket case plagued by famine and floods etc in the 70s decade and into the 80s as well, this sort of growth is a remarkable achievement.

Certainly, Bangladesh can be characterised as one of the success stories of Asia, and it’s not just that — the growth trajectory of the nation is decidedly pointed upward.

According to the PWC (Price Waterhouse Coopers) predictions Bangladesh will be among the top 25 economies in the world in the 50s decade of the 21st century. Without a doubt, therefore, those who scoff at a loan or a currency swap arrangement with Bangladesh, do not have the slightest idea what they are talking about when they turn up their noses at Bangladeshis and call their country a basket case.

Certainly Sri Lanka has a good deal to learn from the teeming nation with a population of 163million. The women in the country have in particular, contributed substantially to the country’s growth which was in the region of 4.7 per cent in the last ten year cycle.

It’s a society rife for experimentation in which the Grameen Bank micro-credit concept worked, though it failed miserably in this country.

Also, the country had the advantage of lax labour laws which helped with the proliferation of garment factories, for the simple reason that international investors in the garment sector preferred a location that offered cheap labour that could be exploited.

Be that as it may, due to the micro-credit schemes, the empowerment of women, and the garment sector, the Bangladeshi economy took off and the story is of still greater upward mobility in the future, up to the 2050s when the country would be a major world economic power to reckon with.


So much for all those remarks about Sri Lanka borrowing from an impoverished backwater — hilarious, such monumental ignorance.

That is one point they make derisively about Bangladesh the new creditor nation to Sri Lanka the perennial debtor, as they like to frame it.

However, the other point they make about Bangladesh vis-a-vis Sri Lanka, as far as the so called loan or currency swap goes, is that we are incapable of advancing while the backwater Bangladesh has made vast strides.

The fact that Bangladesh has progressed enormously since the bad old 70s when the country was a poverty stricken wretched swamp for the poor and hungry is beyond doubt.

As stated above, we can take some lessons from the Bangladeshis in this regard. But having a massive population helps in terms of simple GDP calculations.

Even Pakistan has a rather sizable GDP which can again be attributed to a massive population numbers. It’s not to take away from the ingenuity and resourcefulness particularly in recent times of the Bangladeshi people, but when it comes to GDP, size matters.

This relative GDP heft of the Bangladeshis means that the country can afford to give out hard cash under certain circumstances, but it doesn’t mean that we didn’t progress and only Bangladesh did in the last few decades.

In the weighted indexes that measure which is the better country to live in, such as the GDP PPP per capita (GDP Purchasing Power Parity per capita) and the PQLI (Physical Quality of Life Index) we lead Bangladesh by a considerable margin, and that says much about where they are and where we are.

To this day we have the best indices for quality of life in the region which simply says this country has less poverty than Bangladesh, Pakistan and India.

That doesn’t mean that we can’t borrow from countries that have larger GDPs than us — and all three of these countries do.

This is international currency lending between countries and it is expected that the larger economies would simply have the money to lend which doesn’t mean that these countries are far more developed and richer than ours!

It is reiterated that there is greater poverty in all three of the countries cited above compared to levels of poverty here. But what’s important is that while Bangladesh progressed, Sri Lanka has a far healthier GDP Purchasing Power Parity per capita than other countries in the region including of course, Bangladesh.

We are 88 on that list while Bangladesh is 130, which makes it clear that this country progressed while Bangladesh steadily acquired more heft in pure GDP terms.


As Bangladesh is poised to achieve great heights — aiming at developed nation status in the 2040/2050s— it’s important that as a country we are far ahead in terms of worker rights for instance.

Bangladesh’s growth spurt owes it to exploitation of labour sans almost any salutary labour legislation. But already the think tank heads and politicians there are thinking about the prospect of empowering labour while keeping the economy in good trim with the garment sector delivering despite envisaged changes.

To this end, the country wants to automate factories. That would mean job losses. As it can be seen, this journey has not been easy for the South Asian nation’s teeming millions.

Bangladesh has despite having to contend with issues such as Islamic extremism, managed its internal politics — and those are some of the areas we need to learn from.

Bangladesh’s GDP per capita is almost twice that of Pakistan. Sheikh Hasina’s government was also able to provide Covid aid to India a few weeks back, which is notoriously an aid averse country.

Obviously a great many things are going right with the Royal Bengali Tiger of Asia, as the country’s economy is being dubbed. Our currency swap with the northerly neighbor is to be looked at in this perspective.

With Shiekh Hasina the country has had superlative leadership. With digital transactions replacing currency exchange as the way most people transact business, Bangladesh is well poised to becoming the 24th most powerful economy in the world by 2030 as per some projections.

We need to learn economics and leadership, and not merely obtain loans from Bangladesh.

The country is poised to overtake us in Quality of Life indices two decades from now — so though the snide remarks about our South Asian neighbour over the currency swap with Sri Lanka was not quite right by the progressing Bangladeshi people, the caustic remarks are somewhat correct to the extent that we have to do what Bangladesh did and ensure that we are not left too far behind when the Asian Bengali Tiger dazzles inevitably as a top world economic power in the not too distant future.