Another Indian neighbour is in financial turmoil now situation there is quite similar to Sri Lanka the currency is falling here, foreign reserves are depleting, the trade deficit is widening as well inflation is skyrocketing the economic wars have forced Sheikh Hasina’s government to take a drastic step now over the weekend it hiked prices of diesel and petrol the most significant hike it is since the country got independence.

Last week the sheikh Hasina government raised fuel prices by a record margin. The cost of petrol was hiked by 51 per cent and the cost of diesel by 42. This is the most significant price hike since Bangladesh got independence, which triggered the global rise in oil prices. It has destabilised Bangladesh’s energy market. The state-run Bangladesh petroleum corporation alone has incurred losses of 85 million dollars in the last six months. To make up for the losses, the government has hiked fuel prices, and while it claims there’s no crisis, the indicators and recent developments look worrying. Number one, depleting forex reserves in 2021, which stood at 45.5 billion dollars in July this year; they fell to 39.6 billion. Reports say this money is sufficient for only five months of imports.

Reason number two is a failing currency, and the Bangladeshi Taka is depreciating. It has lost more than 10 per cent of its value since last year. On August 1st, it fell to a record low of 94.7 against the dollar. The falling currency has led to inflation. In June, the rate of inflation hit an 8-year high of 7.56 per cent reason number four is dwindling foreign direct investment; FDI flows to Bangladesh have declined 18.6 since last year because of the widening trade deficit, ‘s reason number five, Bangladesh’s trade deficit has widened to 27.2 billion dollars imports are surging exports have fallen abysmally.

What is Bangladesh doing to overcome these challenges? It sought funds like Sri Lanka and Pakistan last week, and the country applied for an IMF bailout. It sought a 4.5 billion rescue package. Dhaka has also reached out to the world bank, and the Asian development bank talks are still underway. In the meantime, it seems that Bangladesh has also turned to China. On Monday afternoon, the country’s prime minister hosted the Chinese foreign minister they discussed development cooperation and investments. There was no word on financial aid. If Dhaka tracks the news in the neighbourhood, it will be wary of Chinese money.