Worries over repaying foreign debt mount

Staff Reporter :
Worries over repaying foreign debt services are increasing as the debt has become doubled in last six years.
The loans from China, Russia and India on tough terms have added the concerns and the debt repayment pressure will increase in days to come as repayment will be doubled in next three years, economists said.
Besides, the grace period of the loans taken from China and Russia will be ended in next three years, they added.
Ahsan H Mansoor, Executive Director of the Policy Research Institute (PRI), said, “The loans of India, China and Russia are commercial and the repayment period is quite short. Some loan installments have already been started.”
“In fact, the amount of loan installments is also increasing. As the economic situation is not good now, such commercial loans should be avoided for the next five-seven years,” he added.
According to Economic Relations Department (ERD) sources, some $1.12 billion have been repaid in the first 6 months (July-December) of the current fiscal year (2022-23), which is the highest in the country’s history.
A report prepared by the ERD has also predicted that more debt will have to be paid in the future.
A total of $2.78 billion has to be paid in the current fiscal year and the amount will increase every year, the ERD report said.
It will increase to $4.02 billion in the FY 2024-25 and $5.15 billion in FY 2029-30. After that the repayment will continue to decrease, according to the report.
The government had to repay only $1.17 billion in foreign debt in the FY 2016-17. Since then it has increased every year. The amount recorded $2.01 billion in last fiscal year (2021-22) for the first time.
The amount of foreign aid that comes to the country, equal to one-fifth of the debt has to be repaid in every year.
Bangladesh takes loans from Russia, China and India to construct some big projects like Padma Bridge Rail Link, Matarbari Power Plant, Karnaphuli River Tunnel, Hazrat Shahjalal International Airport III Terminal, Payra Sea Port and Rooppur Nuclear Power Plant.
The country also took loans from World Bank, Asian Development Bank, Japan and some other development partners at comparatively easier terms and conditions.
But, now it is gradually taking loans from countries like China, Russia and India on
a bilateral basis on relatively tough terms and the disadvantage of these loans is that the repayment period is quite short compared to the loans of World Bank, ADB or Japan.
Bangladesh has agreed to take loans worth of $36.28 billion from the three countries in last one decade. Of the amount, $17.54 billion for 12 Chinese projects, $11.38 billion for Rooppur Power Plan and $7.36 billion is for three Indian Lines of Credits.
World Bank, ADB has a typical repayment period of 32 to 35 years. But after the grace period China and India will have to repay the debt in 15 to 20 years, which makes the country worry.