Civil societies demand cancellation of foreign loans taken against public interest

Against the backdrop of the ongoing Spring Meetings of the World Bank and the International Monetary Fund, activists of several civil society groups have demanded the cancellation of all foreign loans that go against public interests.

Rather than offering conditional loans, lenders should provide direct financial grants to countries most vulnerable to climate change, they said at a human chain and protest rally programme held before the National Press Club in Dhaka today.

The programme was jointly organised by The Asian Peoples' Movement on Debt and Development (APMDD), Bangladesh Farmers' Federation, Coast Foundation, Waterkeepers Bangladesh, and Center for Participatory Research and Development (CPRD).

CPRD Project Coordinator Sheikh Nur Ataya Rabbi said foreign debt is a threat and a big burden for poor countries like Bangladesh.

"So we're calling for the cancellation of foreign debts without conditions. If cancellation isn't possible, we're asking for interest-less loans," he added.

CPRD Chief Executive Md Shamsuddoha said Bangladesh Bank's foreign currency reserves are at their lowest, with the government borrowing heavily from various financial institutions.

"There's widespread plundering in the banking system, with billions of taka and assets being smuggled abroad, all hindering healthy economic growth," he said.

Ferdous Ara Rumi, general secretary of the World Rural Women's Day Observation Committee, said developed countries like Germany pay an average of 1.5% interest on loans, and the US gives 3.1%. In comparison, African countries pay an average interest of 11.6%, and Asian countries pay 6.5%.

"The poorer the country, the higher its interest rate because they are taking these higher-interest loans from private institutions as public institutions no longer lend to them," she said.

Zayed Iqbal Khan, general secretary  of Bangladesh Farmers' Federation, said developing countries repay their debts mainly from export earnings and in the last decade they have lost that ability.

"In 2010, developing countries' debt accounted for 71% of their exports, rising to 112% in 2022. They have already incurred and continue to incur more debt than their income," said Khan.

Coast Foundation Director Mustafa Kamal Akand said developing countries are exhausting their resources to pay the interest on their debts.

"The 139 World Bank-borrower countries spend 35% of their revenue budgets on debt repayment. Low-income countries and lower-middle-income countries pay 57.5% and 44.5%, respectively.

"We refuse to accept this public debt imposed on the poor because the World Bank and the IMF are responsible for their poverty. They should pay their historical debt, not debt," Akand said.

In a written statement, the president of Bangladesh Farmers Federation Comrade Badrul Alam said the amount of foreign debt of Bangladesh is about $100 billion and a further $4.7 billion from the IMF is added with hard conditions.

"The terms are an increase in VAT, end of subsidy in power sector, increase in price of fuel and electricity etc. Each of these conditions is directly and indirectly a serious blow to the lives and livelihood of the people," said the statement.

The meetings of the two global lenders began in Washington DC on Monday, focusing on global economic recovery, sustainable development, climate change and financial stability. The meetings will conclude tomorrow.