Bangladesh’s soaring per capita foreign debt calls for urgent action

As of June 2023, per capita foreign debt in Bangladesh has reached a staggering $580, compared to $283 in June 2017.

This alarming surge, nearly doubling in just six years, is sounding warning bells among economists who highlight the adverse impact on public services and citizens’ opportunities.

The total external debts, encompassing both public and private sectors, reached $99 billion at the end of June 2023, a significant leap from $45.23 billion in June 2017.

Economists emphasize that per capita foreign debt provides a comprehensive view of the country’s overall indebtedness.

The mounting debt crisis is exacerbated by a continuous depletion of foreign exchange reserves and the devaluation of the local currency, further straining the economy.

While foreign loans can be vital for development, excessive reliance without effective oversight poses risks.

The current surge in foreign debt requires substantial budget allocations for repayment, diverting funds away from crucial public services like healthcare, education, and social safety nets.

The statistics reveal a 51% increase in the country’s foreign debt from $65.27 billion in June 2020 to $98.93 billion in June 2023, indicating a $33.6 billion spike in just three years.

The government’s total debts, including both domestic and foreign, reached Tk16,17,313 crore at the end of June 2023, a significant increase from Tk 13,43,724 crore in June 2022.

The recent exchange rate fluctuations, moving from Tk 84.80 per dollar in July 2021 to Tk 111 after adopting a floating rate and a drop in gross foreign exchange reserves to $19.5 billion on November 8, raise further concerns about the sustainability of the current economic trajectory.

In light of these challenges, the government must take immediate action. Prudent debt management, transparent reporting, and prioritization of resources for sustainable economic development are imperative.

Additionally, efforts to boost foreign currency earnings must be intensified to alleviate the burden of foreign debt on future generations.

A collective call to action is essential to safeguard the economic well-being of Bangladesh and its citizens.