Bangladesh's Foreign Debt Soars To Over $103 Bn Under Hasina Govt

Before being ousted during the mass uprising led by the anti-discrimination student movement, the Sheikh Hasina government left behind foreign loans totaling 10 trillion taka, according to a report by Bangladesh Bank released on September 18.

As of June 2023, the total foreign debt in Bangladesh reached approximately 103.79 billion USD (12.45 trillion taka at an exchange rate of 120 taka per dollar). Out of this, 83.21 billion USD—about 9.98 trillion taka—was incurred by the government, including loans from the government itself, the central bank, state-owned commercial banks, and government agencies. The remaining debt is attributed to the private sector.

Economists warn that these loans, taken at high-interest rates and under strict conditions, are driving up the prices of goods and services provided by government agencies.

Key Statistics:

- Total Foreign Debt: $103.79 billion (Tk 12.45 trillion).

- Government's Share: $83.21 billion (Tk 9.98 trillion).

- Debt Growth: Increased by $53.42 billion over the last 15 years.

- Foreign Debt (March 2023): $99.30 billion.

- Three-Month Loan Increase: $4.48 billion between March and June 2023.

- Foreign Debt in 2008-09: $50.36 billion.

When the Awami League, led by Sheikh Hasina, formed the government on January 6, 2009, the foreign debt stood at 50.36 billion USD. This means the country's foreign debt has risen by 53.42 billion USD over the past 15 years and 8 months.

According to the Bangladesh Bank report, the outstanding foreign debt for both the government and the private sector was 99.30 billion USD as of March 2023, indicating that the former government incurred nearly 4.48 billion USD in foreign loans in just three months.

Analysts note that due to poor debt management by the previous administration, a significant amount of loans was sourced from domestic avenues. While foreign loans are generally viewed favorably by economists, many were taken haphazardly and without adequate negotiation, which has strained the government's debt situation.

Following the global financial crisis triggered by the COVID-19 pandemic, rising U.S. interest rates led to increased interest rates on foreign loans. Additionally, the substantial devaluation of the Bangladeshi taka created challenges for private sector businesses that had borrowed in foreign currencies, causing them to focus more on repayment rather than acquiring new loans. However, with dollar stability and rising domestic interest rates, businesses have begun to seek foreign loans again.

From 2009 to 2023, the Sheikh Hasina government undertook several major projects, including the Padma Multipurpose Bridge, Dhaka Metro Rail, the third terminal at Dhaka’s Shahjalal Airport, the Dhaka Elevated Expressway, the Rooppur Nuclear Power Plant, the Karnaphuli Tunnel, and the Matarbari Deep Sea Port. These projects have significantly contributed to Bangladesh's foreign debt exceeding 100 billion USD.