If doesn’t borrow further
Mahfuz Emran: According to an August report by Deutsche Welle, if Bangladesh does not take any new foreign loans now, it will take up to 2062 to pay off the interest and actually what it has taken. And in the last 10 years, the amount of loan interest and principal repayment has doubled to $ 100 billion in Bangladesh.
As time goes by, the pressure of repaying this loan will increase. And Bangladesh is taking loans again. As a result, the pressure will continue to increase. Analysts say there are several projects in the foreign loan that have been overspent. “Looted” with loans. Bangladesh will have to pay the price.
According to the Finance Ministry’s calculations, in the outgoing financial year (2022-23), 47 percent more debt has to be paid than the previous year. And the payout has doubled in the last six years.
Interest and principal repayments of the loan in the financial year 2022-23 were $2.74 billion. $201 crore in the fiscal year 2021-2022. $73 million had to be overpaid in one year.
According to the report of the Ministry of Finance, $328 million will have to be repaid in the financial year 2023-24.
After six years in the financial year 2029-30, the amount will be $5.15 billion. If Bangladesh does not take any new loans, it will have to repay the interest and principal until 2062.
The burden of foreign debt is also increasing with development. Public and private debt has doubled in the last seven fiscal years to billions of dollars and is now in the century mark. Economists believe that more loans are needed to normalize the situation even though the issue is considered critical in the ongoing crisis. Therefore, they suggest increasing reserves by emphasizing remittances and diversifying export earnings to achieve capacity.
In the last decade and a half after independence, the overall changes in infrastructure, communication system, economic and social development of the country are more revolutionary than any time before. Development aid lending countries and organizations have played a major role behind the government’s willingness to build so many developments and state-of-the-art management.
According to the latest report of Bangladesh Bank, the amount of foreign debt has reached one hundred billion dollars in the implementation of public-private multifaceted activities. Of this, the government and public institutions took $79 billion; The remaining $21 billion will be taken by the private sector. About 84 percent of these loans are long-term, and the remaining 16 percent are short-term. Of necessity, these loans have doubled in the last seven fiscal years.
The foreign debt taken by the government and government institutions is $79 billion.
But the question naturally arises, how will the government pay off so much debt step by step in the midst of the ongoing foreign exchange crisis? Economists are giving dire advice in such a situation. Advice on taking more loans to pay off debt.
Economist Mahfuz Kabir on the current situation of foreign debt said, if we had not to repay the loan from 2024, we would still be under great pressure.
The huge amount of debt that we will have to repay from next year will put a lot of pressure on the economy of Bangladesh. So, now that the situation is not normal, we need some more loans to improve the foreign exchange reserve situation. So, we have to avoid the bilateral loans that are available now, the terms of which are strict, and borrow from good sources.
From next year, Bangladesh will have to pay $4 to $5 billion every year to fulfill various loans including mega projects. Bangladesh Bank refused to comment on this.
However, as a developing country, the economist does not consider this amount of debt to be dangerous, said Jamal Uddin Ahmed.
We have to pay off this debt with our income. We need to increase our exports and remittances. There is no alternative. In this case, we have to increase the export destination of our products. We are sitting in a certain boundary with the garment sector. We need to create a competitive business environment by exporting products of other industries including leather industry.
According to the Internal Resources Department (ERD) data, the World Bank accounted for 33 percent of the loans given to donor countries or organizations till June 2023. Then the Asian Development Bank (ADB) has 24 percent, and Japan has contributed 17 percent.
Special Correspondent: President of the Bangladesh Insurance Forum (BIF), BM Yusuf Ali, ha…