London-based daily Financial Times (FT) published a report recently distorting statements made by Finance Minster AHM Mustafa Kamal during a recent interview with the newspaper. The finance ministry sent a rejoinder to FT regarding the report with distorted speech.
As per the FT report, Finance Minster AHM Mustafa Kamal, in an interview with the daily, warned that developing countries must think twice about taking more loans through China's Belt and Road Initiative (BRI) as global inflation and slowing growth add to the strains on indebted emerging markets.
"Bangladesh's finance minister has warned that developing countries must think twice about taking more loans through China's Belt and Road Initiative as global inflation and slowing growth add to the strains on indebted emerging markets," the FT report said.
"AHM Mustafa Kamal also said Beijing needed to be more rigorous in evaluating its loans amid concern that poor lending decisions risked pushing countries into debt distress. He pointed to Sri Lanka, where Chinese-backed infrastructure projects that failed to generate returns had exacerbated a severe economic crisis," it added.
Refuting the claims made by FT, Ministry of Finance Public Relations Officer Gazi Towhidul Islam, in a rejoinder, wrote that the headline of the FT report "Bangladesh's finance minister warns on Belt and Road loans from China" (published on Tuesday, 9 August, 2022) "does not properly reflect the minister's actual position."
The ministry rejoinder, published as a "letter" by FT on Friday (12 August), reads as follows –
"We appreciate the Financial Times reporting on developments in the Bangladesh economy.
However, we feel the headline on your report "Bangladesh's finance minister warns on Belt and Road loans from China" (Interview, FT.com, 9 August) does not properly reflect the minister's actual position.
The report mentioned Sri Lanka, which defaulted on its sovereign debt in May and is in negotiations with the IMF. The report said that BRI loans had "exacerbated a severe economic crisis" in that country but it did not say that Chinese loans led to the defaulting; rather the problem arose from sovereign debt.
Minister AHM Mustafa Kamal in the interview made clear that any project in any country could be financed if it is proven financially viable through rigorous study. He stressed that Bangladesh would never take on finance from any authority if it were not feasible. He was in no way warning about Chinese loans.
To be clear, Bangladesh owes approximately $4bn to China — a trifling amount compared with Bangladesh's gross domestic product of $416bn, and its external debt of $51bn (2021 figures).
The FT report said "[Bangladesh] foreign reserves have also fallen to less than $40bn from more than $45bn a year ago". It should have been made clear that reserves stood at only $32.7bn in June 2019. By August 2021, they had risen 47 per cent to $48.1bn, the highest ever recorded in the history of Bangladesh.
Today, reserves stand at $40bn, enough for more than five months of import payments and beyond the risk threshold prescribed by the IMF."