Foreign debt payments have started to create pressure on economy

Bangladesh is facing mounting pressure on foreign debt payments as its annual loan repayment rose by more than 37 per cent in the outgoing fiscal year of 2022-23 compared to the previous fiscal.

Taking into account the last six years, the amount of loan payments has doubled.

Bangladesh paid a foreign debt of USD 2.74 billion (274 crore), including principal and interest, in the outgoing fiscal year, while the amount was USD 2.01 billion in 2021-22.

This means the payment of loans increased by USD 730 million in just one year.

According to a recent report from the finance ministry, Bangladesh will have to make a payment of USD 3.28 billion in the current 2023-24 fiscal and the amount will soar to USD 5.15 billion in 2029-30FY.

The report further stated that even if Bangladesh does not take any new loans, the country will have to pay the existing loan with principal and interest till 2062.

The situation has arisen due to a reduction in the disbursement of soft loans and an increase in the amount of high-interest loans.

The pressure has further intensified with the start of loan repayments for the Rooppur Nuclear Power Plant.

Additionally, there are repayment pressures for loans taken from China and India.

The loan installment for the Rooppur power plant cannot be paid since Russian banks were banned from the SWIFT system.

According to ERD sources, Bangladesh paid a loan amount of USD 1.1 billion in the fiscal year 2012-13.

Over the next 10 years, that amount increased to USD 2.01 billion.

The surge in loan payments mainly started as the repayment of Chinese loans began in the last two to three years.

Now, the pressure of Russian loans has been added, further complicating the situation.

This pressure is expected to increase in the coming days as the repayment of loans for the Karnaphuli Tunnel project and the Padma Bridge rail link project will begin this year.

The government has acknowledged that the pressure seems to be increasing due to the volume of loan repayment, but has not admitted its failure to reimburse loans in time that will mount pressure in the upcoming days.

And even if there is a new government after the election, it will be in trouble because of the unbridled mega corruption of the regime.