Govt needs more 39 years to repay outstanding debt
Kamruzzaman Bablu :
If Bangladesh government does not take any new foreign loans now, then it will take another 39 years to repay the ongoing debt. Because of what has already been taken it will take up to 2062 AD to repay the interest and actually, analysts say.
Meanwhile, in the last 10 years, the amount of interest and principal repayment of loans already has doubled. As time goes by, the pressure of paying this loan will increase. In this situation, government is taking loans again. As a result, the pressure will continue to increase in the coming days.
The analysts say there are several projects under foreign loans that have been overspent. Basically it was “looting” in the name of debt.
According to the Finance Ministry’s data, in the outgoing fiscal year (2022-23), government had to pay 47 per cent more debt than the previous year. And the amount of repayment has doubled in the last six years. In the financial year 2022-23, the interest and principal repayment of the loan was $274crore which was $201crore in the fiscal year 2021-2022. As a result, additional 73crore dollars had to be overpaid in one year.
According to a Finance Ministry report, the government will have to be repaid $328crore dollars in FY 2023-24. After six years in the financial year 2029-30, the amount will be $5.15 billion. If Bangladesh does not take any new loans, the interest and principal of the loan will have to be repaid by 2062 AD.
The government had to repay $110crores debt in the financial year 2012-13. After 10 years in FY2021-22, it stands at $201crore.
Meanwhile, loan financial aid exemptions are shrinking. At the same time, commitments of loans are also declining.
According to a data of International Monetary Fund (IMF) released for the year 2020-21 in last February showed that there is 40,000crore dollars in the pipeline for Bangladesh. Among them, more than 90 per cent are soft loans. At present, the total foreign debt of Bangladesh is $7229 million dollars. In last January 30, the IMF approved a loan of 4.7 billion dollars to Bangladesh. The first installment of which is 476.2 million , 70,000 dollars has been released. Of this, $1816 crores from the World Bank, $1328crore from ADB, $923 crore from Japan, $509crore from Russia, and $476 crore from China have taken as loans.
The country’s domestic and foreign debt stood at Tk16.14 lakh crore, according to the Bangladesh Bank’s latest report published in July.
The amount of debt per capita in the country is Tk. 950019 and country’s foreign debt is 17 per cent of total GDP. Foreign debt is 43.5 per cent of the government’s total debt. The debt-GDP ratio is gradually increasing in the country. The debt-GDP ratio was 28.7 per cent in 2014, which is now 42.1 per cent.
“We have taken short-term loans as opposed to long-term loans for various projects. These have higher interest rates and are repaid within a short period of time. These are taken from some countries including Russia, Japan on the basis of bilateral relations. These loans are less monitored than the World Bank or IMF. As a result, maybe the government is leaning towards it. Now if returns start coming from these projects then the pressure will be manageable. Otherwise the pressure will be too much. This will put more pressure on our foreign exchange and reserves,” Salim Rayhan, Executive Director of South Asian Network on Economic Modeling (SANEM) and Professor of Economics Department of Dhaka University, told The New Nation.
“In my opinion, these loans need to be reviewed with the conditions, project and everything. The whole process needs to be reviewed. And such loans should be avoided in the future,” he said.
“In the fiscal year 2024-25, country’s debt repayment amount will exceed $4billion. As a result, the government will be under heavy debt repayment pressure from 2024-25 to 2029-30 financial year,” Dr. Moinul Islam, Former president of Bangladesh Economic Association and Professor of the Economics Department of Chittagong University, told this correspondent.
“These loans have been taken for big projects. There the implementation time has been extended. The loan amount has increased and the loan has also been taken more. I think there has been looting here, said this prominent economist.
‘From each project, bosses have taken big margins. As a result, this situation has arisen.’ Citing an example he said, “12 billion dollars Russian loan has been taken for Rooppur Nuclear Power Project. Its production capacity is 2400 MW. However, a nuclear project of 2000 megawatts of power generation has been done in Tamil Nadu, India with only six billion dollars. From here our point is understood. And Russia will also take more dollars away from us by showing higher costs,” added Dr. Moinul.
