Bangladesh plagued by foreign debt23 January 2021
Bangladesh is gradually being plagued by foreign debt, understandable through the budgetary allocation for external debt repayment, which would worsen further in the current fiscal year and weaken efforts to revive the economy bogged down by the Covid-19 pandemic. A news report in a national daily on Friday said that our per capita external loan now stands at around Tk 23,425. Even a newborn baby will also have to bear this burden.
Meanwhile, the development partners have raised the rate of interest and also tightened various conditions in getting loans. During the current fiscal year, the government aims to borrow Tk 70,502 crore from external sources to implement its annual development programme.
In this context, economists have suggested for proper implementation of foreign loans in appropriate projects. They opined that the government is taking loans with high interests and maintaining their conditions for different development projects. If the money is not spent properly, the actual purpose of this loan with people's money will be totally wasted, they opined.
According to them, external debt is good for the economy if it can be utilised properly in the projects that would yield long-term return for the country. They, however, said that the debt obligations would definitely create pressure on Bangladesh as the coronavirus pandemic is taking a toll on the economy. In addition, export and remittance will go down significantly due to the global economic meltdown. The repayment of high-cost suppliers' credit will also start this fiscal making the debt burden even heavier.
As reported, the government has set aside Tk 18,368 crore for foreign debt repayment in the current fiscal, a 16 per cent rise from the allocation in the outgoing fiscal year. However, the external debt-to-GDP ratio that reached 14.7 per cent is below the ceiling of 40 per cent.
Since independence in 1971 till June 30 last year, foreign borrowing ran into Tk 4923.85 crore of which the government has so far repaid Tk 2000.42 crore.
We should have to focus on to increase domestic savings for higher investment. For this, political stability in Bangladesh is a must. Corruption should have to be reduced by close monitoring. Besides, the country needs to attract external debt in a way that can create new opportunity of investment and employment opportunities in the country.