Hasina ran away keeping Tk 18.35tr loan burden

Mahfuz Emran: When Sheikh Hasina came to power in 2008, Bangladesh’s debt was only $33.66 billion. Recently, he resigned from the post of Prime Minister in the face of student uprising on August 5 and left the country. At the time of his departure, the country’s debt burden had risen to $156 billion.
According to the information of the Ministry of Finance, the total debt of Bangladesh has reached Tk 18 lakh 35 thousand crores (Tk 18.35 trillion) till June 30. Out of this, domestic debt is $88 billion (Tk 10 lakh 35 thousand crore) and foreign debt is $68.33 billion (about Tk 8 lakh crore).
One has to look at the proposed budget to understand how this huge debt is affecting the economy of Bangladesh. The budget for the current financial year has earmarked Tk 1 lakh 35 thousand crore (14.02%) for interest payment, which is the highest out of over Tk 8 lakh crore expenditure.
Economists have blamed the huge debt on cost overruns and corruption in mega projects, leading to revenue stagnation. During the three terms of the government, the total expenditure was about Tk 54 lakh crores, and the revenue income was only Tk 37 lakh crores. Expenditure has increased from Tk 94 thousand crore in 2008-09 fiscal year to Tk 7 lakh crore in the revised budget of 2023-24 fiscal year.
Bangladesh’s revenue-GDP ratio is currently around 9 percent, one of the lowest in the world.
Economists have blamed the National Board of Revenue’s (NBR) lack of reform initiatives, tax evasion, and tax exemptions to various groups. Besides, corruption in mega projects is widening the revenue-expenditure gap, according to them.
Zahid Hossain, the former chief economist of the Dhaka office of the World Bank, said that most of the mega projects are under the influence of corruption. He mentioned that Padma Bridge was built by Bangladesh with its own funding, but the money for Karnaphuli Tunnel and Rooppur Nuclear Power Plant came from foreign sources. According to him, the project was corrupted by cost overruns, and unnecessary elements were added to the project.
Executive Director of South Asian Network on Economic Modeling (SANEM) Salim Raihan blamed the government’s failure to mobilize domestic resources for the rise in debt. According to him, over the past decade, the government has failed to increase revenue collection and the project cost has increased multiple times due to corruption in foreign-funded mega projects.
As a developing country, Bangladesh has to borrow, but Sheikh Hasina’s government tended to borrow at high interest rates in addition to short-term loans. There was a need to look into long-term debt.
Bangladesh’s debt service-to-revenue ratio is expected to exceed 100 percent for the first time due to increased debt, lower taxes and export earnings, raising the risk of debt repayment capacity. According to International Monetary Fund (IMF) data, the debt-to-income ratio was 58.7 percent in fiscal year 2021, rising to 72 percent in fiscal year 2022 and 71.8 percent in fiscal year 2023. This ratio is estimated to reach 101.1 percent in the current financial year.