Bangladesh highest in sovereign guaranteed loan among 46 LDCs

Syed Nasir Hossain: Bangladesh’s foreign debt is increasing day by day. The amount of this loan has increased rapidly in the last few years. In this, the ratio of gross domestic product (GDP) is increasing rapidly. Both the public and private sectors have increased the tendency to take foreign loans, increasing both interest and principal repayment pressure.
Currently, Bangladesh has the highest government and Sovereign guaranteed foreign debt among least developed countries (LDCs). None of the 46 LDC countries are close to Bangladesh. This information has emerged in the report entitled ‘The Least Developed Countries Report 2023’ of UNCTAD. The report was released globally.
Incidentally, Bangladesh is currently in the process of transitioning from an LDC to a developing country.
The United Nations Committee for Development (CDP) recommends Bangladesh to transition from LDC in 2021. In 2026, Bangladesh will completely withdraw from LDC. In the same year, Laos and Nepal will leave the LDC.
Every year, UNCTAD assesses the overall state of the economies of LDC countries.
It has highlighted the figure of government and sovereign guaranteed foreign loans of 46 LDC countries at the end of 2021 and various related analyses.
According to the report, the government and sovereign guaranteed foreign debt of Bangladesh at the end of 2021 stood at $62.425 billion, which was $54.787 billion at the end of 2020. That is, in one year, Bangladesh’s government and sovereign guaranteed foreign debt increased by $7.638 billion or 13.94 percent. The growth rate of government and sovereign guaranteed foreign loans was the highest in 2021. Earlier in 2019, Bangladesh’s government and sovereign guaranteed foreign debt was $46.376 billion.
Angola has the second highest public and sovereign guaranteed foreign debt among LDC countries. The country’s debt is $46.74 billion. Ethiopia, which is in the third position, has a debt of $28.171 billion.
Being in the fourth positionTanzania’s public and sovereign guaranteed foreign debt is $18.917 billion and Sudan’s is in fifth place at $15.305 billion. Other LDC countries have less such debt.
According to UNCTAD, Bangladesh’s public and sovereign guaranteed foreign debt is higher than GDP. In 2021, such debt of Bangladesh stood at 18.6 percent of GDP. Angola’s public and sovereign guaranteed foreign debt is 13.9 percent of GDP, Ethiopia’s 8.4 percent, Tanzania’s 5.6 percent and Sudan’s 5 percent. Such debt in other LDC countries is less than five percent of GDP.
According to the report, two-thirds of Bangladesh’s government and sovereign guaranteed foreign loans are from multilateral sources. However, foreign debt interest payments have become a cause of concern for some LDC countries, including Bangladesh. In particular, from 2019-2021, an average of more than 10 percent of the government expenditure of some countries went to pay interest on foreign loans. Among them, the highest was 33 percent in Angola and 22 percent in Bangladesh.
Meanwhile, the pressure of Bangladesh’s foreign debt repayment (debt servicing) is also increasing. Debt servicing in 2020 was $2.014 billion. In 2021, it has increased to two decimal $772 billion.
Note that in 2010, Bangladesh’s government and sovereign guaranteed foreign debt was $21.146 billion. It increased to $22.218 billion in 2011, $24.197 billion in 2012, $25.034 billion in 2013, $26.538 billion in 2014, $27.094 billion in 2015, $29.080 billion in 2016, $35.256 billion in 2017 and $41.285 billion in 2018.