শ্রীলংকার অর্থনীতির এই অবস্থা কেন? Sri Lankan Economic Crisis | Explained by Enayet Chowdhury - YouTube

On August 30, the current President of Sri Lanka, Gotabaya Rajapaksha, declared a state of emergency in the country to control the prices of essential commodities.

Although I know that after hearing this, you are thinking of declaring a state of emergency in Bangladesh every minute.

But trust me, the case of Sri Lanka is different.

Sri Lanka's foreign currency reserves for 2019 were 7.5 billion.

It went down to 2.8 billion in July 2021.

In comparison, Bangladesh's foreign reserves are now about 44 billion, which is about 22 times more than Sri Lanka's.

The Sri Lankan rupee has lost about 20% against the US dollar.

Now one US dollar equals about 199 Sri Lankan rupees.

And one dollar is about 85 Taka.

In this situation, Bangladesh has already promised to give a loan of 250 million to Sri Lanka

And the method they will use is called currency swap method.

In all, the question is who is responsible for the situation in Sri Lanka?

What will be the benefit of Bangladesh or Sri Lanka in the loan given by Bangladesh in currency swap system?

If they had to take money, why didn't Sri Lanka take a loan from an international bank?

Why did you take a loan from Bangladesh?

Is there any conspiracy of China behind the bad situation of Sri Lanka?

I will discuss the whole incident with you in this video.

So let's get started.

First you have to understand- food deficiency been started in Sri Lanka.

Food is not available or even if available, the price is much higher.

Food is being traded on the black market in Sri Lanka just like the black market of trading arms.

So why this food shortage?

And since there is a syndicate here, why is this syndicate different from the syndicate in Bangladesh?

Sri Lanka is an import dependent country.

And you must spend foreign reserves to import.

There are two problems here.

1. Your foreign currency reserves have been reduced. With this small foreign currency reserve you are buying food from outside.

It's too expensive.

When you are going to sell those foods in your country, inflation goes up a lot.

One US dollar is now 199 Sri Lankan rupees.

So as an importer, as a normal shopkeeper in Sri Lanka, you have to bring food at higher prices and sell at lower prices.

That is why the supplier is not releasing the food in market.

Because if you release now, it will have to be sold at a lower price. The result will not be profit.

You can call it a syndicate that the current government is trying to control. By declaring a state of emergency.

The second reason is that no chemical fertilizers or pesticides can be imported from outside in Sri Lanka.

The government is planning to make everything organic here.

It was first declared on April 27, 2021.

the government proclaims that it will save about 400 million per year.

But Sri Lankan farmers started protesting here.

Because of this, there is a huge food shortage

and Sri Lanka's main export product * tea *, which also created a big problem.

Sri Lanka exports tea and brings in about 1.25 billion every year

Which is 10 percent of their total export income.

It costs about 10 times more to produce organic tea than normal chemical fertilizers.

Moreover, Sri Lankan experts say that on average when Sri Lanka produces 300 million kg of crop every year,

That could come down to about half due to government action

So the situation in Sri Lanka is a lot like a vicious circle.

You need to save your foreign currency. For this you are reducing the import.

Due to reduced imports of things like chemical fertilizers, you are not able to export the exporting products (like tea).

That is why there is a shortage of foreign currency again.

Local vendors are also not releasing their own goods because inflation is too high here.

There is another very important reason behind the decline of Sri Lanka's foreign currency.

They had a big down hit in their tourism sector.

Sri Lanka's tourism sector contributes about 12.5% ​​to the total GDP and contributes 11.4% to the GDP growth rate.

You can clearly see in this graph.

The green line is Sri Lanka. The red line is Bangladesh.

This shows the percentage of total GDP that a country has contributed to the tourism sector.

In 2019, it is only 4.4 percent of Bangladesh which is about 12.6 percent in Sri Lanka.

This means that Bangladesh is not as dependent on their tourism sector as Sri Lanka is.

And the gap is huge. About 8 percent more.

This bar chart clearly shows how the number of tourists in Sri Lanka has decreased by about 70.8% in March 2020.

And in this graph you can see that in 2018, Sri Lanka earned 4380 million from the tourism sector.

In 2019 it was 3606 million and in 2020 it was reduced to 956 million in 2020.

Sri Lanka fell into trouble because of the pandemic.

This is a big reason for their foreign currency reserves to go down from 7.5 billion to 2.8 billion.

In this situation, as a neighbour country, Bangladesh, for the first time in their history, gave a loan to a country and that country is Sri Lanka.

(People of Bangladesh after hearing this news) I want to dance now, I want to sing!

It must make us happy.

Sri Lanka did not have to send any picture of Solaiman Sukhon on Bangladesh Messenger.

* You give me money *

Which is considered to be the best way to get money from friends in today's youth generation.

In this case, Bangladesh will pay Sri-lanka 250 million and this method is called currency swap.

That means 250 million from Bangladesh's reserve currency will be given to Sri Lanka.

But the money will be repaid with interest in Sri Lankan rupee.

According to the agreement between Bangladesh and Sri Lanka, Sri Lanka will repay Bangladesh 250 million dollars within three months with interest rate.

This interest rate is charged internationally. It is called London Interbank Offered Rate.

LIBOR + 2 percent.

This means that if you take a loan from a country's central bank, it has a world-wide fixed rate that you have to pay at least for such a fixed rate.

With that, Bangladesh will take two more percent interest.

Recently LIBOR's rate is 0.14%.

It tends to fluctuate.

The total will be 2.14%.

2.14 percent interest on 250 million brings it to 303.3 million.

Sri Lanka will give it in Sri Lankan rupee.

If Sri Lanka cannot pay the money within three months, the interest rate will not change,

but if it isn’t paid within six months, Bangladesh will charge 2.5% interest.

Then Sri Lanka will have to pay 2.68% interest along with the rate of LIBOR.

Now the question is what will be the benefit of Bangladesh?

AB Mirza Azizul Islam, economic adviser to the Bangladesh Government ,said it was the right move.

Because if Bangladesh had spent its money in any other sector, it would not have got more than one percent interest rate

where we are getting about 2.14% interest rate here.

Sri Lanka has offered us a good interest rate.

And the central bank of Bangladesh has a large amount of foreign currency reserves.

Even after importing every three months, a huge amount of money remains.

With which we can help the neighbors.

The question is why Sri Lanka proposed such deal?

If Sri Lanka wanted, they could have taken a loan directly from the World Bank or the IMF.

Why didn’t they do so?

There are two reasons for this.

1. If you take a loan from another international entity, your debt burden will increase.

They charge higher interest rates.

In this case, the 2.14% interest rate offered by Bangladesh is much more profitable for Sri Lanka.

2. If you take a loan from a company, you have to keep it in the balance sheet.

But if you use swap currency method, it does not have to be included in your balance sheet.

The biggest problem when including the balance sheet is -

The balance sheet shows your historical cost.

Which is one of the limitations of the balance sheet.

If you are a student of Commerce, you already know.

The historical cost is - if you sell a land today for Rs. 100,000, you have to show it on the balance sheet for Rs. 100,000.

Even five years from today, if the price of land becomes 5 lakh, it will still show 1 lakh on your balance sheet.

For this, it seems much better for Sri Lanka to balance in the currency swap method than to show the loan on the balance sheet.

In many cases, China is blamed for the situation in Sri Lanka.

You will see a common concept in the market.

This is called China's Debt Trap.

Lots of memes out there and they are very famous.

As of June 2019, China’s loans to the Sri Lankan public sector amounted to 15% of the central government’s external debt,

making China the largest bilateral creditor to the country.

Unable to service its debt, in 2017, Sri Lanka lost the unviable Hambantota port to China for a 99-year lease.

China traps a country in its debt trap and continues to occupy its strategic positions within that country.

However, an opposite article has been written on *The Atlantic *.

Where it was said that Chinese Debt trap was a myth.

Mahinda Rajapaksa, the elder brother of the current president, Gotabaya Rajapaksa, suddenly called an election in January 2015.

The election campaign was going well.

In the last few days of his election campaign, his health minister challenged him to vote against him.

The Minister is Maithripala Sirisena.

Sirisena eventually won the election.

He was president until 2019.

Notice, at that time there was trouble with the seaport of Hambantota.

When Sirisena took office, Sri Lanka owed more to Japan, the World Bank and the Asian Development Bank than to China.

Of the $ 4.5 billion in debt service Sri Lanka would pay in 2017, only 5 percent was because of Hambantota.

Here it is said that the way seaport of Hambantota is being promoted in the Chinese debt trap, is not the case.

Both Rajapaksa and Sirisena told us that Hambantota, and Chinese finance in general, was not the source of the country’s financial distress.

So I think you need to see the opposite logic of the concept that is prevalent in the country with the Chinese * Debt Trap *.

I will give the link of the article in the comment box. You can read it if you want.

So far in today's video.

Now let's go to meme review.

I don't know why none of you join subreddit.

Join Subreddit now. The link is given in the description. I will give in the comment.

So far my hard disk has been deceiving me a lot.

That's why the video is late.

No problem, everything is fine now.

After hearing the news of the opening of the school and college, the students tried the uniforms.

In fact, I forgot about this scene of ​​* Breaking Bad *.

Normally this should be scene.

Though I'm not in school, college or even university.

Uniforms are not required at the university though. There are exceptions.

Tell me in the comment box, which university has uniform? Especially in Dhaka of Bangladesh?

The correct electron configuration of copper-

Benzene.

If you have no idea about this cycle then don't take para.

Only those who have read biochemistry very well will understand.

After watching Enayet Chowdhury's video 20 times, the child was caught by his father.

Sometimes it is better to be caught doing these things.

So that's why I've to end it.

So far in today's video.

I usually upload videos on Wednesday at 5p.m.

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Stay fine stay healthy.

See you on next Wednesday In Sha Allah at 5 p.m.

Allah Hafez!