Report Ministry of Finance
Zarif Mahmud: Although risk-free by international standards, the total debt in the country is about Tk 13.5 lakh crore (Tk 13.5 trillion) as of latest. This is almost twice the national budget. Against this loan, in the last financial year, Tk 75,000 crore were spent on interest payments.
More than Tk 73,000 crore have to be counted in the interest sector in the current financial year as well. Added to this are the effects of the Russia-Ukraine war and the unusual appreciation of the dollar. As a result, foreign debt installments and interest costs have further fueled. Which is putting a kind of pressure on the economy. A report related to the debt of the Ministry of Finance has revealed the information about the debt and interest expenses.
According to sources, out of total debt, foreign debt is Tk 4 lakh 95 thousand 794 crore and domestic debt is Tk 8 lakh 47 thousand 930 crore.
Meanwhile, the size of the loan is increasing every year. That is, the total amount of debt in the financial year 2020-21 was Tk 11 lakh 42 thousand 948 crores. Debt has increased by Tk 2 lakh 776 crore in a span of one year. Earlier, the amount of loan in the financial year 2019-20 was Tk 10 lakh 6 thousand 202 crore. Here too, the debt has increased by Tk 1 lakh 36 thousand 746 crore within a year.
After the Covid-19 hit, the loan portfolio has increased significantly. One of the reasons for this is the reduction in revenue collection due to covid, excess expenditure, slow pace of financial growth.
According to International Monetary Fund (IMF) standards, a country can borrow up to 55 percent of its total GDP. It will be considered risk free. Accordingly, Bangladesh’s debt is 33.79 percent of the total GDP. Similarly, it is safe to borrow 55 percent of GDP in terms of external debt. There the ratio of foreign debt is 12.47 percent of GDP. It is said that Bangladesh is still risk-free in terms of borrowing.
When asked about this, former senior finance secretary Mahbub Ahmed told that the ratio of debt to total GDP is more important than the total amount of debt. Then the real picture will be available. However, the country’s position is still good in terms of taking loans compared to its peers.
Currently, India’s government debt is 54.3 percent of GDP, while Pakistan’s is 74.9 percent. In that case, Bangladesh’s debt is 35.5 percent of GDP. However, there are some issues which are the repayment amount including loan and interest. Because the large installments of the loan have already started to be paid. Will increase in the future. As a result, a loan can’t be taken suddenly in any case. Care must be taken in this case. Borrowing will be advisable only in projects which will earn foreign exchange.
The government prepares the budget to cover the income and expenditure of the whole year. A part of this budget is deficit. To meet this deficit, loans are taken from other sources including the banking sector within the country and from abroad. The finance department prepares a report on the amount of money owed to the government after borrowing and repayment.
The report is mainly prepared for the financial year 2021-22. More loans have been received and repaid in the last 7 months of the current financial year. But the calculation of actual debt is done at the end of the financial year. That is why we have to wait till June to get the actual accounts of the current financial year. As a result, since August, the country’s domestic and foreign loans including IMF have not been included here.
It has been seen as debt, the amount of borrowing and repayment from the banking sector so far, still there is a debt of Tk 4 lakh 19 thousand 627 crore. This is 31 percent of the country’s total debt. The second credit sector is savings bonds. A loan of Tk 3 lakh 65 thousand crore has been taken from this sector. It is 27.20 percent of the total debt.
The third sector of debt is treasury bonds. Tk 3 lakh 24 thousand 603 crore was taken from here. In this way, Tk 77,000 crore have been taken from the treasury bill, Tk 18,000 crore from Sukuk bonds and Tk 62,770 crore from the general future fund (GPF) of government employees. The government will have to pay these debts in the future.
According to sources, a package was announced on the one hand to recover the economy including the management of the health sector, vaccination programs urgently to deal with Covid-19. On the other hand, the government takes special initiatives to get foreign aid. As a result, in 2019-20 fiscal year, US$ 240 million, US$ 655 million in 2020-21 fiscal year and $ 459 million in 2021-22 fiscal year were received from abroad.
According to the report of the Ministry of Finance, a large amount of interest is being paid every year against the government’s debt. In the financial year 2021-22, Tk 24,388 were spent on interest payment against bank loans, Tk 40 thousand 8 crore were spent on interest payment against savings certificates and Tk 4235 crorewere spent on foreign loan interest payment. Tk 70,128 crore have been spent against General Provident Fund loans.
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