Govt plans securing $10b foreign loan

Staff Reporter :
In the fiscal year 2023-24, the government has planned to secure loans amounting to nearly $10 billion from international financial institutions and its development partners, including the World Bank, Asian Development Bank (ADB), and Japan.

This move comes as the government aims to address economic challenges and bolster reserves amidst a global financial landscape fraught with uncertainties.

According to sources within the Economic Relations Division, the government has set a target of securing agreements for loans equivalent to $993 million for the current fiscal year from various donors.

Considering the prevailing market exchange rate, which stands at approximately Tk. 1.09 trillion, this represents a substantial financial injection into the economy.

Notably, loan agreements totaling $720 million have already been signed in the past eight months (July-February), accounting for 72% of the planned borrowing for the entire fiscal year.

Economists emphasize the urgent need for foreign assistance amid the current economic scenario.

They argue that increasing the supply of dollars is essential to alleviate the ongoing dollar shortage and maintain foreign currency reserves.

Ahsan H. Mansur, Executive Director of the Policy Research Institute (PRI), suggests that securing loans through projects rather than budgetary support would be more beneficial for the country.

Mansur stresses the importance of careful consideration and analysis before entering into loan agreements, as these loans entail interest payments that must be factored into the budget. With government spending on interest rising, there is mounting pressure on the budget.

To expedite the implementation of foreign loan projects and accelerate the disbursement of foreign aid, a committee was formed under the leadership of the Principal Secretary to the Prime Minister, Tofazzal Hossain Mia, on January 24th of this year.

The largest portion of planned loan agreements falls under the pipeline of the ADB, with agreements totaling $2.99 billion. Of this amount, agreements worth $262 million have been signed with the ADB from July to February.

Japan follows closely, with planned loan agreements totaling $2.41 billion for various projects with the government. During the first eight months of the fiscal year, agreements amounting to $202 million have been signed with Japan.

Additionally, the World Bank’s pipeline includes agreements amounting to $1.42 billion.

Agreements for new loans have been finalized with the World Bank in the past eight months, totaling an estimated $142 million.

At present, there are no new projects in the pipeline awaiting loan agreements.

However, discussions and negotiations with international partners continue as the government seeks to secure necessary financing to support economic growth and development initiatives.