Online Shopping In Bangladesh
Online Shopping In Bangladesh
Blog Article
The global economy is currently experiencing severe debt crisis. According to the International Monetary Fund (IMF) worldwide public debt is expected exceed US$100 trillion to reach 93 per cent of global gross domestic product (GDP) in 2024. This figure will approach 100 per cent of global GDP by the end of the decade.
Earlier this year the Institute of International Finance (IIF) which is the global association of the financial industry, with about 400 members from more than 60 countries, estimated that global public debt hit a record US$91.4 trillion. The world's combined GDP in 2024 is projected to be approximately US$109.5 trillion.
According to the United Nations Conference on Trade and Development (UNCTAD). global public debt had reached a record high of US$ 97 trillion in 2023. Although public debt in developing countries reached less than one third of the total - US$ 29 trillion - since 2010, it has grown twice as fast in developed economies.
Public debt can be vital for development. Governments use it to finance their expenditures, to protect and invest in their people, and to pave their way to a better future. However, it can also be a heavy burden, when public debt grows too much or too fast. This is what is happening today across the developing world.
This global debt crisis is manifesting itself in several ways including worsening balance of payments deficits, chronic budget deficits and continued downward pressures on the exchange rates in many countries including Bangladesh. The IMF in the latest edition of its semi-annual Fiscal Monitor report warned that "Sustained debt buildups can raise the probability of debt distress or broader fiscal crisis".
Both developed and developing countries are affected by this global crisis. Developed countries have also become trapped in worsening debt crisis. The IMF have in recent times focused on the US labelling it as one of the worst offenders urging it to rein in the spiralling debt. By the middle of this year, the US public debt hit US$35 trillion-- equal to the combined GDP of China, Japan, the UK, Germany and India. If the current public debt trend continues in the US, the Debt/GDP ration will exceed 140 per cent by 2032.
Economic growth prospects have been steadily declining since the 2007-208 global financial crisis (GFC) with inflation remaining a persistent feature, fiscal buffers exhausted and rising debt levels posing significant challenges to public finances in many developed countries. The US is already expected to run a fiscal shortfall of 6.5 per cent of GDP in 2024 pushing the debt to 100 per cent of GDP despite ongoing robust economic growth.
Online Shopping In Bangladesh.
However, according to calculations based on World Bank International Debt Report 2022, when developing countries borrow money, they are to pay much higher interest rates compared to developed countries, without considering the costs of exchange rate fluctuations.
According to the UNCTAD estimates, the number of countries facing high public debt has increased sharply from 22 in 2011 to 59 in 2022. During this year (2024) public debt servicing costs are expected to rise by 10 per cent for developing countries and go up to 40 percent for least developed countries. More alarmingly about 33 low-income countries are unable to repay their debts. In Kenya for instance deadly protests erupted this summer after government attempted to raise taxes to mitigate a debt crisis that saw interest payments ballooned to absorb 60 per cent of total government revenue.
Total public debt of Bangladesh stood at US$166.7 billion in 2022-23 accounting for 39.8 per cent of GDP. However, majority of public debt in Bangladesh, if denominated in the taka, accounts for 55.6 per cent of the total debt. Domestic debt service payment amounted to US$7.8 billion in 2022-23 accounting for 1.9 per cent of GDP. External debt was 44.6 per cent of the total debt and debt servicing cost US$2.1 billion accounting for 0.7 per cent of GDP during the same period.
Bangladesh like many other least developed countries bear lower amount of global debt, but its severity is much higher due the limited capacity to balance foreign exchange to meet external financial obligations. Since 2020 rising inflation and large-scale illegal transfer of money overseas undermined the economic stability. The country's foreign exchange reserves have declined more than half to around US$19 billion.
In view of the severe financial stress faced by Bangladesh, the country is now considering delaying its scheduled graduation into a developing economy in 2026. The Finance and Commerce Adviser at a press conference recently said, "Bangladesh will not go for graduation hurriedly. Instead, it would take some time Online Shopping In Bangladesh.
But various estimates indicate a continuously rising trend in the volume of public debt in Bangladesh in the future. It is estimated that between 2024 and 2029, public debt in Bangladesh is expected increase by US$164.5 billion indicating an increase above 100 per cent during this period. Therefore, public debt is expected to stand at US$326 billion by the end 2029. However, it is to be noted that these estimates were made when Sheikh Hasia was in power.
But it is also to be noted that public debt has been very rapidly rising in Bangladesh over the last one decade. In fact, it has rapidly accelerated since 2018. This period coincided with the second half of repressive and corrupt rule of Sheikh Hasina. Widespread corruption during Hasina's 15 years' rule resulted in nearly US$150 billion siphoned out the country. US based think-tank Global Financial Integrity, found that most of the stolen funds came from loans taken from banks, largely by politically influential people and businesses.
During Hasina's corrupt rule she had over-exercised her power and patronage and saw the flourishing of high levels of white-collar crimes including an unprecedented scale of financial corruption. Hasina's own immediate family has also been alleged to be deeply involved in financial corruptions, not to mention the extended family.
In fact, there has been an unprecedented rise in white collar financial crimes during her 15-year rule. A very significant part of these borrowed public funds has been obtained to enable Hasina and her family member and cronies to steal money by undertaking "mega-projects" which created appropriate environment for undertaking mega financial corruptions further exacerbating the national debt problem.
Online Shopping In Bangladesh.
The head of the IMF Kristalina Georgieva has given very downbeat assessment of the global economy in her recent speech. Such an assessment creates further disillusionment for Bangladesh and other least developed countries.
She pointed out IMF forecasts "an unforgiving combination of low growth and high debt - a difficult future'. Georgieva also pointed out that major economies were "increasingly resorting to industrial policy and protectionism, creating one trade restriction after another".
More worryingly, the IMF also mentioned in its Blog (October 15) that the fiscal outlook of many countries might be worse than expected for three reasons-- large spending pressures, optimism bias of debt projections, and sizeable unidentified debt.
On the same day, the World Bank in a press statement said "the global goal of ending extreme poverty - less than US$2.15 per person per day by 2030 is out of reach." However, the WB sets an extremely low borderline for extreme poverty. This figure of US$2.15 per day cannot be a reliable indicator and can not be taken seriously to extrapolate the number of very poor people living on this planet. But this is a very terrible admission of failure for the WB, an organisation supposed to help reduce poverty globally.
Online Shopping in Bangladesh.
As debt burdens mount around the world, investors are growing anxious. Higher debt servicing costs mean less money available for public services or to face economic emergencies. Over the years, trade and technology transfers has helped promote growth and created a closely linked global economic order. But the global power structure led by the US known as the "rule-based order" and the very "rules" this order is based on are slowly weakening and, in some cases, disappearing, thereby increasing the space of possibilities for all countries.
But conditions have also been increasingly intensifying for trade wars over the last one decade, and likely to be more so under the newly US president-elect Donald Trump. But Trump vastly underestimates the potential ramifications of his tariff policy. Trump's proposed corporate tax cuts will also further add to the national debt. Also, the Russia-Ukraine conflict, the Gaza war, a major escalation of war against Iran, and rising debt problems along with the climate problems mean countries around world including Bangladesh will have to make significant and painful adjustments.