Govt plans to borrow Tk 2.5 tr for budgetary support in FY 2025

Mahfuja Mukul: Government’s dependence on debt to meet development and operational expenditure is increasing. The government has planned to borrow more than Tk 2.5 lakh crore from domestic and foreign sources to meet the deficit expenditure in the proposed budget for the next financial year.
The country’s economy has various external pressures including the dollar crisis. Therefore, for the financing of big projects and budget support, the dependence on international donor organizations as well as friendly countries is increasing.
In the meantime, the schedule of the Prime Minister’s visit to India and China has been fixed. Those concerned said that Bangladesh is also expecting a big funding commitment from the two countries.
Prime Minister Sheikh Hasina attended Indian Prime Minister Narendra Modi’s swearing-in ceremony last week. A brief meeting was also held between the heads of government of the two countries at that time.
The Prime Minister is scheduled to visit India again on June 21. Sheikh Hasina’s first bilateral visit to Delhi after assuming office as Prime Minister for the fourth consecutive term has already been finalized.
In this situation, it is being said that the relationship between the two countries will be ‘taken to a new horizon’ through further development. Apart from this, it is expected that future development projects including Teesta water distribution, border killing and military assistance will be discussed during this visit. However, analysts are not expecting any new big loans from India at the moment.
Within a few days of his return from India, the Prime Minister is going to visit China in the second week of next month. The tour is scheduled to be held on July 9-12.
According to sources related to the Economic Relations Department (ERD), China is expected to provide $5 billion in budgetary support for the Prime Minister’s upcoming visit. It is being discussed that this loan will be met on easy terms at 1 percent interest. Apart from this, several major projects including the Teesta project are also to be discussed with the country.
According to ERD sources, China has already expressed interest in investing in the Teesta project several times. If the discussion on this project is positive, there may be a financing framework agreement of $5 to $10 billion with the country for a few years. The competition between China and India in the geopolitics of South Asia is now increasing. Bangladesh maintains good relations with both countries as friends. Analysts say that while taking cooperation from other countries, potential profitable areas should be checked and considered. Bangladesh may try to relax the conditions of the existing loan agreements as there is no possibility of any major financing from India at the moment. And the Prime Minister’s visit to India before going to China is also a big assurance from Bangladesh for New Delhi.
When asked about the two visits of the Prime Minister, former Foreign Secretary Md. Touhid Hossain told, “Three credit lines of $7 billion with India already exist. These discounts are very low. As a result, India is unlikely to come forward with a large amount of money now. One could be lines of credit that can be paid off quickly. That is also difficult, because then they have to be persuaded quickly to relax the conditions. But the Prime Minister will go on a short visit. You have to prepare in advance. No such visible preparation came to my notice. I don’t think there will be any big decision. Whether the two Prime Ministers will take any policy decision, it can be said after the meeting between them.
The former foreign secretary feels that there is an issue behind the Prime Minister’s visit to India to reassure the country about China. However, politicians known to be close to India and China feel that there is no opportunity to see the two visits together. Their statement in this regard is that there is no competition between the two countries over Bangladesh. And Bangladesh will not enter any such competition.
In this regard, President of Jatiya Samajtantrik Dal (JASD) Hasanul Haque Inu told, “In the Prime Minister’s visit to India, our economic, cultural, scientific cooperation and suppression of militancy will be discussed.” The purpose of the visit will be mainly to identify the problems and identify possible solutions. It will be discussed whether economic benefits can be increased beyond this. Apart from these, I do not see any other important solution in this visit. India and China are two completely different tours. It is not right to equate one with the other here.
Bangladesh Communist Party General Secretary Dilip Barua thinks that taking economic cooperation from China is beneficial for the country at the moment. He said, “The entire amount of Indian debt has not been cleared yet. Apart from this, Teesta Master Plan is very important for national interest. China has always said that the country will stand by our economic crisis. Not only that, but they have also come to cooperate. In the continuation of this, I think that China should take cooperation in the Teesta plan.
All the loan support commitments made by China and India are yet to be fully implemented. Although several agreements and promises have been signed with the two countries, Dhaka has been accused of slowness in implementing them and releasing funds. Even in the current fiscal year, Bangladesh has not yet received any new funding commitment from the two countries.
In addition to maintaining good relations with the two countries, former ambassador M. Humayun Kabir feels that it is necessary to consider whether it is beneficial and profitable for all concerned parties in the long run. He said, “What will be the relationship with India and China in terms of economic and infrastructural cooperation, should be determined from the perspective of Bangladesh’s needs.” Our national interest should be given the most importance. Our development partners here will have their own perspective. But there we have to remember who is capable of what work, what our previous experience tells us, what is needed for our national interest in the short term and what in the long term. Besides, we have to go to the decision keeping in mind the type of cooperation, profitability in the long term and whether it is beneficial for both parties.
A Memorandum of Understanding (MoU) titled ‘Strengthening and Production Capacity Cooperation’ was signed during the visit of Chinese President Xi Jinping to Bangladesh in 2016. Xi Jinping assured about $25 billion of financial support in various sectors including the scope of that agreement. Under that MoU, a total of 27 projects were to be implemented in Bangladesh with Chinese loans. But later 10 projects started but most of them did not see the light of day. India has committed to pay $7.3 billion to Bangladesh under three Lines of Credit (LoC). The first LoC agreement was signed between the two countries in 2010. Later, two more LoC agreements were signed in 2016 and 2017. According to ERD sources, so far, the financing against these contracts is less than $1.5 billion. And unlike the second and third agreements, the disbursement is slow. There are also complications with the terms of the contract. Dhaka had to negotiate the terms of these agreements several times. There may be talks on relaxing the terms of the agreement in this visit as well.
The former foreign minister AK Abdul Momenthinks that India will be more interested in providing security assistance than lending. He said, “Bangladesh has two types of relations with India and China.” We welcome those who will help us. We will not be dependent on any particular country. We will take from the country from which we will get economic support.
While expecting new funding for the Prime Minister’s visit this year, the government’s policy makers feel that caution is needed to ensure proper spending of this money. Former Planning Minister and President of the Parliamentary Standing Committee on Planning Ministry MA Mannan MP said, “Both countries are very important to us. India is our lifelong neighbor and thousand year partner. But there are fears about India’s debt. Our and their bureaucratic complexity is evident. So, the LoC loan projects are not progressing properly. But China is better in terms of financing. But their contractors are aggressive. Chinese contractors arrived here before the loan agreement. Then it becomes difficult to ignore them. So even if there is no apprehension about receiving money, there is apprehension about proper spending. We have to be frugal in some places and reduce costs.