Debapriya Bhattacharya

Bangladesh needs to learn from Sri Lanka’s experience about how to face an unprecedented economic crisis and recovery strategies to avoid similar circumstances and improve the well-being of citizens, said Debapriya Bhattacharya, a distinguished fellow at the Centre for Policy Dialogue (CPD).

Sri Lanka’s economy was crushed last year under its worst financial crisis in more than seven decades, with inflation skyrocketing and foreign exchange reserves falling to record lows, severely stunting its ability to import essential commodities, according to a Reuters article.

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In May 2022, it even failed to make an interest payment on its foreign debt for the first time in its history. It had borrowed $200 million from Bangladesh under a currency swap agreement two years ago.

In September this year, Colombo paid $50 million to Bangladesh, the final instalment of the loan as its embattled economy is staging a recovery.

In the last six months, Sri Lanka has seen inflation drop to just 1.3 percent in September, its currency appreciate by about 12 percent, and foreign exchange reserves improve.

“To that end, the think tanks that we have gathered here have a special role to play to do the analytics and empirical analyses to help evidence-based policy-making and bring the private sector, media and young community along with it in order to create a constituency pressure to go forward,” said Bhattacharya.

He made the remarks while addressing a plenary session titled “Identifying New Opportunities and New Modalities for Fostering Regional Cooperation in South Asia” at the 14th South Asia Economic Summit, a two-day event, hosted by the CPD at the Sheraton Dhaka hotel.

He said despite the impasse, the time hasn’t come to write off the South Asian Association for Regional Cooperation (Saarc).

“It is still there and there are many modalities within the Saarc. We should exhaust its inner potential first. And let’s create political momentum within the Saarc.”

“However, we should not remain hostage to these structural issues. Rather, we should explore new opportunities, including other multilateral and plurilateral.”

“We need to think through how we can create regional platforms that are not hostage to structural impediments,” he said, calling for creating political momentum.

Shekhar Shah, vice-chairman of the Academic Advisory Council at the Indian School of Public Policy, questioned why the countries in South Asia can’t form a successful platform like the G20, an intergovernmental forum comprising 19 sovereign countries, the EU and the African Union.

Platforms such as the G20 allow leaders to meet periodically and to resolve problems, he said, adding that there should be a commitment from leaders not to part ways.