Readers’ Voice

Foreign debt concern of Bangladesh economy

Bangladesh is a developing country with a big debt economy. External Debt in Bangladesh is expected to reach 45.00 USD Billion by the end of 2022, according to Trading Economics global macro models and analysts’ expectations. In the long-term, the Bangladesh Outstanding External Debt is projected to trend around 40.00 USD Billion in 2023, according to our econometric models. But Bangladesh’s total external debt soared by about $13 billion to cross $94.5 billion at the end of June 2022, compared to the previous year, indicating an increasing dependence on foreign loans for its development activities.
According to the Bangladesh Bank data, the country’s total debt from foreign sources stood at $81.57 billion in the financial year 2020-21, up from $45.81 billion in 2016-17. On the other hand, the gross foreign exchange reserves stand at $34.5 billion. The net foreign currency reserve is $26.5 billion if the IMF instructions are followed. Foreign debt can only overcome the short term crises. But at the end of the day Bangladesh have to repay the loan with interest which ultimately equal to sending dollar to another country.
Is this actually relevant to take foreign debt more often?
Generally, Bangladesh depends on imports which exceeded the amount of export and remittance amount the two major earning points of Bangladesh. Because of environment hazard agricultural products are producing as per expectation. Despite in every fiscal year end deficit budget nonperforming loan is also creating negative impact in economy. To reducing this gap there must be needed possible opportunity. Day by day foreign debt is increasing but products in Bangladesh are not increasing like satisfactory way. Every day there is a problem that need to be solved with reserve money but every day there is no way to put back the reserve money. This little gap will slowly become a giant problem that might be very difficult to solve. So, it is the time to take step to make more products and alternative products.There are some way that might help overcome this problem:
1) Focusing on vocational education: Educated on vocational school students can make their own factory that can increase production.
2) Turn empty land into agriculture land: By doing this people can be entrepreneur of their own business selling the products of their land.
3) Setting modern research center: With modern research center new innovation can be developed and there will be no need to buy from other country.
4) Setting up innovative factories: Despite doing infrastructure development, production process need to be developed with innovation that will reduce cost and will do more production.

Meherun Nesa
Student, Jahangirnagar University