Bloomberg lauds PM Hasina for reforms to maintain economic stability

ZOOMBANGLA DESK: The globally famed Bloomberg news agency has praised Prime Minister Sheikh Hasina for her “timely reform steps” to negate impacts of the worldwide economic crisis in Bangladesh, predicting the initiatives to elect her government for fourth straight term in next general elections.

“She is expected to win a fourth straight term in the elections,” the international finance biased news service wrote in an article, simultaneously suggesting Sheikh Hasina “needs to push more reforms to receive all funds”.

“Sheikh Hasina is widely expected to win a fourth straight term in national polls expected by January 2024 — not least because many of her opponents are behind bars or ensnared in legal cases”.

The Bloomberg published the article against the backdrop of Bangladesh’s receipt of International Monetary Fund (IMF) loans which it attributed to the South Asian country’s timely reforms to maintain economic stability ahead of the next national election.

The article commented that Sheikh Hasina’s victory was expected not merely “because many of her opponents are behind bars or ensnared in legal cases” but due to her success in ensuring economic stability.

Following is the full Bloomberg article headlined “Bangladesh Leader Bets IMF-Mandated Rigor Will Pay Off in Polls” with two sub-heads:

Government leaders across the world have often balked at implementing reforms agreed with the International Monetary Fund for fear of being penalized at the ballot box. Bangladesh Prime Minister Sheikh Hasina isn’t one of them.

Her quick execution of IMF mandates have stood out in South Asia where Pakistan is still fiddling with fuel subsidies just as it inches closer to reviving a bailout. Sri Lanka has delayed local municipal polls as it raised taxes and interest rates to clinch IMF funds last week.

Bangladesh, which in July became the last of the three countries to ask for IMF support, was the first to get loans approved after swiftly raising energy prices. Hasina, 75, made no apologies for the move.

“Gas and electricity supply can be provided if all agree to pay the purchasing costs,” she said a week $4.7 billion in IMF loans were secured on Jan. 31. “How much subsidy can be given? And why should we continue subsidies?”

Such comments are typically unheard of as elections approach: All three nations face key votes over the next 18 months. But unlike leaders in Sri Lanka and Pakistan, Hasina is widely expected to win a fourth straight term in national polls expected by January 2024 — not least because many of her opponents are behind bars or ensnared in legal cases.

“If the ruling party manages to maintain economic stability, that could preempt anger or public sentiment that works against the government,” said Michael Kugelman, director of the Wilson Center’s South Asia Institute. “Hasina certainly has the credibility to pull this off.”

In contrast, Pakistan Prime Minister Shehbaz Sharif polled low in a survey ahead of elections later this year and has been blamed by voters for the economic crisis. While Sri Lankan leader Ranil Wickremesinghe has pushed through reforms, he depends on the support of a party run by a powerful clan and will need to seek a new mandate in presidential elections due September 2024.

Hasina is banking on her government’s move to go to the IMF to show to markets and voters that she has prevented the $460 billion Bangladeshi economy from going the way Sri Lanka has with a default. Pakistan is also facing the prospect of a default.

Bangladesh went to the IMF as it grappled with an energy crisis with commodity prices soaring last year due to Russia’s war in Ukraine, while the rising costs of imports widened the trade deficit. The local currency depreciated by a fifth and reserves fell to the lowest in three years.

By winning access to IMF funds, Hasina’s government is gaining some time to fix the economy before the elections. Signs of a weakening economy could well trigger public anger against the premier who has overseen growth of more than 6% on average for the past 14 years though it slowed to about 3.5% during the pandemic.

The first review of the IMF program is set for the second half of 2023, and Bangladesh Mission Chief Rahul Anand sees the authorities “taking comprehensive steps” to unwind subsidies and move to a market-driven exchange rate.

Bangladesh has received $476 million under the facility so far. Further disbursements depend on the government ensuring reforms for the financial sector, ranging from the central bank pursuing an independent monetary policy to reducing non-performing loans and spurring climate change funding. (BSS)