We must proceed with caution about foreign loans on tough terms
On the one hand, the government’s income is decreasing, while on the other, its expenditure is increasing at an abnormal rate.
The country’s revenue deficit has exceeded one lakh crore taka. Due to the Middle East war, it has to spend a lot on fuel oil imports.
Although our export income is decreasing, we have to spend more on importing essential food items and other products.
To meet the funding crisis, the government is going to take foreign loans at high interest rates and on tough terms.
Most of these loans are non-concessional or inflexible.
The grace period of these loans is also short. Experts believe that these loans can be used to manage the budget deficit in the short term.
Thus, it will be difficult to manage the pressure of debt repayment in the near future.
The government has approved five loan proposals worth a total of $1.9 billion from development partners. Of this, $1.6 billion is inflexible.
The loans were approved at a meeting of the Standing Committee on Non-Concessional Loans held at the Planning Ministry in Sher-e-Banglanagar on Tuesday.
Reportedly, a major portion of the approved loans, about $1.3 billion, will be used as budget support.
According to media reports, this budget support package includes $450 million from the Asian Development Bank (ADB), $500 million from the Japan International Cooperation Agency (JICA), $250 million from the Asian Infrastructure Investment Bank (AIIB), and $100 million from the OPEC Fund for International Development (OFID).
Experts think that these loans are mainly taken on the basis of commercial interest, which is usually around 5-6 percent and is much more expensive.
As the country’s external debt repayment pressure is increasing rapidly, therefore, we need to be more careful in debt management from now on.
It is important to avoid mega loans and show restraint in taking loans with difficult terms.
Despite this pressure, initiatives have been taken to purchase 14 aircraft.
Biman Bangladesh Airlines has signed a $3.7 billion deal with Boeing, the top US aircraft manufacturer.
The estimated value of the aircraft in terms of taka is around 45,510 crore.
Mentionable, on February 9, two days before the national elections, the interim government led by Dr. Yunus signed a trade agreement with the United States to purchase 25 aircraft. However, the current government has reduced it to 14.
Analysts warn that the situation ahead may be more difficult.
Therefore, the government will have to move forward cautiously, taking all aspects into account.
Efforts should be made to keep the amount of non-performing loans as low as possible.
