Bangladesh, a debt of 16 billion dollars: Yunus’ government asks for patience as textile brands go where labor costs even less

DHAKA (AsiaNews/Agencies) – Muhammad Yunus, Nobel Peace Prize winner, is leading the government of Bangladesh, after the escape of Sheikh Hasina, the former prime minister accused, along with 6 other people, of the death of about 400 people during the street protests, which culminated with her resignation. She had governed Bangladesh uninterruptedly from 2009 until August 5th. Now she has found refuge in India.

The social and financial disaster of the country. Yunus, therefore, finds himself having to deal with a desperate situation in a country oppressed by deep and widespread poverty, with 41% of children underweight and with severe growth disorders and more than a third of the population surviving on less than 2 dollars a day. What’s more: the number of bad loans in the Asian country has never been so high: according to data released by the Central Bank, at the end of June, credit institutions were short of more than 2 thousand billion taka, approximately 16.8 billion dollars, 12.6% of the total loans granted by banks.

Loans no longer collectable. They are also called non-performing or bad debts: these are loans that the debtors – in this case especially companies – are no longer able to repay. A situation which, according to insiders, began to leak out under pressure from International Monetary Fund – to secure a $4.7 billion loan -, but which came to light after the departure of former Prime Minister Sheikh Hasina, forced to resign – precisely – by anti-government protests led by students. From March 30 to June 30 this year alone, there was a gap of more than 290 billion taka (almost $2.5 billion). More than 30% of the non-performing loans were contracted with state banks, compared to 7.9% with private banks, percentages that the Bangladesh Bank wants to bring below 10% and 5% by 2026.

The debt estimate is underestimated. Several experts have expressed skepticism about the central bank’s audits and said the real bad loan figures could be significantly higher than reported. Selim RF Hussain, president of the Bangladesh Bankers Association, said the previous Awami League government did not follow international standards in terms of classifying loans or making provisions.

“There was no benign negligence, there was a theft”. It is therefore likely that the next quarter, from July to September, will also see further increases due to the fall of the government: several business groups, experts continued, have taken out loans only thanks to their political influence. “This was not benign negligence,” commented the new governor of the central bank, Ahsan Mansur, “but a deliberate theft of the financial system.” He then added that restructuring the system will take several years and funding from the International Monetary Fund.

“Have patience,” Yunus tells the nation. The Nobel Peace Prize winner, in an address to the nation, asked his fellow citizens to be patient, although it is not clear for how long: “I ask everyone to be patient,” he said. “One of our goals is for public institutions to regain the trust of the public opinion.”

The situation remains tense. Despite the promise of reforms, from the courts to the Election Commission (the officials who were part of it resigned today), the situation in and around Dhaka remains somewhat tense. In dozens of factories in the textile sector (on which the national economy depends), workers are still protesting, demanding better wages. In the meantime, however, some large international brands have already declared their intention to move production for the next season to other countries in the region, especially Vietnam, which offers lower-cost labor.

The election date has not yet been announced. The government has not yet announced when the next elections will be held. The Bangladesh Nationalist Party (BNP), which has remained in opposition for the past 15 years under Sheikh Hasina’s increasingly authoritarian rule, has called for the polls to be held as soon as possible, knowing it could win by a margin based on public dissatisfaction.