World Bank, IMF vs. BRICS Where are the blessings of developing countries like Bangladesh? -MD. Maruf Mozumder

Economy

By the end of World War II, Europe was in dire straits. Countries with thorny infrastructure and depleted economies were breathing down the huge necks of debt. With such a fragile economy, they will not re-organize their country and will repay the debt. At the same time, world leaders are worried that if this continues, it will be difficult for the global economy to survive. We need to keep in mind that the global economic impact is much like the butterfly effect, which means that if there is any instability in the economy at one end of the world, its remnants will be felt in the country on the other side of the planet.

In 1944, the leaders of the then-45 countries met at Bretton Woods in New Hampshire, USA to curb the tug of war in the world economy. The goal is to create some global institutions whose main function is to deal with the state of the global economy. In other words, the few institutions that will create a global, universal economic system, will increase mutual cooperation in dealing with the economic crisis, if necessary. With that goal in mind, the current much-discussed World Bank, the International Monetary Fund (IMF), was born at the Bretton Woods Conference. In unison, many have referred to Breton Woods Institutions.

Naturally, the question arises: how global is the World Bank in the current context? According to ATN Bangla, since its inception in 1944, it has been providing loans and grants of an average of 6.5 billion annually, and the World Bank considers the “Safeguard Policy” to be a more humane and democratic model of economic development. The sad fact is that the same model of development for the development of the world is not the opposite of the one of interest. As in the case of the refusal of the World Bank loan, the opposite is the debt trap to try to control the internal politics and economy of a country.

If we look at the history, we can see that till 1978, the development lending of this organization was less. It gradually relaxed. France was the first country to take the first loan. The French government was forced to expel all members of their coalition partner, the Communist Party of France. An hour after the move, the French loan was approved. From 1986 to 1980, the main objective of the World Bank was to significantly increase lending to help meet the basic needs of the people of developing countries. According to the data, developing countries’ debt increased at an average annual rate of 20% from 1978 to 1980.

Developing countries are more likely to suffer in this case. In particular, if we think of Bangladesh, it would be difficult to say how much economic success the country has had since joining the post-independence (1972) World Bank. No matter how much the World Bank has helped with foreign loans over the past few decades, the dramatic loan of the Padma Multipurpose Bridge project will go down in history. Nevertheless, it is imperative that our bitter relationship with the World Bank be quickly transformed into honey. We have to remember that our economy is very much dependent on imports.

In this case, it is important to always be careful when taking out foreign loans. Otherwise, the storm of bankruptcy in Sri Lanka will not be too late. Second, the International Monetary Fund (IMF) comes into the discussion. In the twenty-first century, the question arises, why was the IMF formed? Where today’s IMF is working on global development, its purpose in creation was different. World leaders have called for the IMF to address the economic impact of the ongoing global conflict, such as the butterfly effect. But how much of it is currently visible? The recent global crises, such as the Ukraine crisis, the Houthi rebellion, the political polarization of the Arab world, and the rising prices of commodities in developing countries, have not disrupted public life. On the other hand, if a country goes bankrupt, there is no delay in controlling its internal affairs, including its government system, with loans.

In this situation, what should be done in Bangladesh? Now that geopolitics is popular, everyone arranges their economic policies in line with the geographical location of their respective countries. It is important to remember that the period from 1917 to 1939 is called the Inter-War Period. At that time, the global economy was in a state of turmoil, with global trade constraints, high inflation, stock market speculation, the rise and fall of foreign reserves of central banks, and a gold crisis. The IMF was formed to overcome this. Therefore, it is advisable to bring harmony in improving Bangladesh’s relations with the IMF. Significantly, the World Bank and the IMF are institutions owned by different states. However, unequal decision-making structures exist here. There is no suffrage on the basis of equality. There is no ‘one country, one vote’ policy. Each state has 250 votes. The United States has the highest vote in the World Bank.

For example, in the United States, 15.96 percent of votes were cast, 8.69 percent in Japan, 4.45 percent in China, and 4.3 percent in Germany. In a world where even though China, India, and Russia have qualified candidates, it is enough to influence only ten countries to garner support for the US nominee. Importantly, the World Bank, the IMF, and all developing countries, including Bangladesh, introduced their loans to Eastern Europe after the fall of socialism. From this, it is evident that the main role is to play an active role in the development of capitalism and the growth of capitalist ideology in order to prevent socialism.

In this context, the first BRICS journey began in 2009. The BRICS are Brazil, Russia, India, China, and South Africa (joined in 2010).It is said that these five countries have entered into unwritten competition with the western world in various fields like technology, economy, reform society, trend of development, etc. They are making themselves fluent in the economy day by day. These countries are equally aware of their own future. One thing is for sure: when BRICS first started, the whole world was going through an economic recession.

In view of this situation, the BRICS summit was convened by the five countries to control their economies. The powers of the BRICS countries will be a little more powerful than the Mint states, as the Mint countries have not only begun to enjoy development, but the BRICS countries have proved their own power and they are not lagging behind the United States and European countries. The main reasons for the unification of these five countries are to keep pace with the West and to protect the sovereignty of the developing countries. It should not be forgotten that there is no debate in developing countries about the role of the World Bank and the IMF. They do not do social work. The loans they give to more developing countries, including Bangladesh, are clearly nothing more than investments.

As a result, BRICS announced the establishment of the bank in 2015, renaming it the New Development Bank. It is also not less likely to be on an equal footing with the developed countries in the economic development of the developing countries.
In today’s world, China, Russia, and India are at the very top of the list of economic superpowers. Also, looking at the past years, we can see that China was far ahead of other developed countries in terms of epidemic economic growth, which is expected to continue to flow. China is the NDB’s largest investor. Developing countries suffering from the ongoing crisis in Ukraine are relatively less likely to be disappointed if they approach the BRICS Bank without a soft loan from the World Bank and the IMF. However, the extent to which this will extend its influence in the future depends entirely on how bitter or sweet Sino-Indian relations will be in the future. Considering the geo-political position, it can be said that the two countries will be one in the race for the economy.

Since the recent US-Ukraine-Russia long-running war, India’s use of tactics and its silent role have had a significant impact. In the polarization of multipolar-centric global politics, it does not take long for the opposite to happen, just as it does not take time for the allies to become enemies of economic change. The ongoing proxy war in Russia is likely to have a major impact on the global economy, such as the devaluation of the currency, Sri Lanka, and Lebanon’s bankruptcy. In that case, Bangladesh has immense potential. In fact, at present, Bangladesh’s economy and investment sectors are largely dependent on China. Bangladesh may now lean towards the Asian Infrastructure Bank, China or Japan.

However, in this case, it is very important to bring balance. That is, if the import-export ratio is proportional, the burden of foreign debt will not be much. In other words, the BRICS could be an alternative lender to developing countries as opposed to the World Bank and the IMF. In this case, I think you need to be aware of Debt Trap diplomacy. Above all, Bangladesh should exercise caution when borrowing, remembering the words of the Debt Trap. In that case, the World Bank, the IMF, and the BRICS Bank could be potential.
Md. Maruf Mozumder, student of Department Of Political Science, University Of Chittagong.