Bangladesh's Foreign Debt Surpasses $100bn For The First Time

Bangladesh's foreign debt has exceeded $100 billion for the first time, indicating a challenging future in terms of foreign currency deficit, according to economists. According to the latest information from the Bangladesh Bank, by the end of 2023, the total amount of foreign debt stood at $100.6 billion, compared to $96.5 billion a year earlier.

Of this debt, $79.69 billion has been taken by the government sector and the remaining portion has been taken by the non-government sector. Eighty-five percent of this debt is long-term, while the rest is short-term.

Ahsan H Mansur, Executive Director of the Policy Research Institute of Bangladesh (PRI), stated that the increase in foreign debt is worrying for the country. He suggested that the supply credits taken from China and Russia should be stopped immediately to manage the situation.

Supply credits refer to a commercial agreement under which a supplier extends credit terms to a foreign buyer for the purchase of goods or services.

Former IMF economist Mostafizur Rahman mentioned that if foreign debt continues to increase gradually, it will pose challenges for debt repayment because both revenue and foreign currency earnings for the country are declining.

Mostafizur Rahman further explained that both foreign debt and expenditure are increasing. In the first five months of the current fiscal year, interest payments on foreign loans increased by 136.7% to reach $562 million compared to the same period last year.

He emphasized the need to utilize the foreign loans available in the pipeline for projects quickly to prevent an increase in interest expenses.

Meanwhile, foreign loans in non-government accounts have decreased by about 14%, reaching $20.95 billion.

A senior official of the Central Bank mentioned that while interest rates on foreign loans used to range from 1% to 2%, they have now increased to 8% to 9%.

He attributed this trend to the inclination of non-government accounts to reduce foreign debt.