Annual foreign debts can be paid with two months’ remittance: Finance minister

Finance Minister AHM Mustafa Kamal has said that it is possible to pay off the entire year's foreign debt of the country with the remittances sent by expatriates in just two months.

"Bangladesh would spend $2.4 billion on foreign debt repayment in the current fiscal year, which would increase to $2.8 billion next fiscal. In the 2023-24 fiscal, $3.3 billion will be spent to pay off foreign debts, and $4 billion the following year," the minister said while comparing Bangladesh with Sri Lanka in a pre-budget discussion held online with newspaper editors and top executives of electronic media on Thursday evening.

"Our expatriates are sending $2 billion to the country this month. With the two-month remittances, it will be possible to meet Bangladesh's foreign debt for the entire year," he said.

"We are accustomed to dealing with crises, we have experience," Kamal said, referring to the country's rising inflation and the foreign currency crisis due to the ongoing war between Russia and Ukraine.

"I was asked if the situation in Bangladesh would be like that of Sri Lanka, but we have financed Sri Lanka. Their inflation rate has been at 31% for a long time. Inflation in India and Pakistan is also high, but it never crossed 6% in Bangladesh. Our debt-to-GDP ratio is also at an all-time low, 34-35% of GDP," the minister said.

"We are taking loans for productive projects. We approve the project considering how much revenue will be generated from the projects, how much employment will be created, and whether the cost will be reduced or not," he said.

"Around 77% of our loan is soft loan, taken from the World Bank, Asian Development Bank (ADB), Islamic Development Bank, and Japan International Cooperation Agency (JICA). On the other hand, Sri Lanka has taken loans from commercial banks," the minister said.

About inflation, Kamal said, "The Food and Agriculture Organization (FAO) of the United Nations said in May that commodity prices had risen by 30% in the global market. According to the World Bank, prices of wheat, beef, chicken, soybean oil, sugar, urea, TSP and fuel oil have risen sharply."

"We are a market-based economy. If anything happens anywhere in the world, it affects us too. We have to run our country in accordance with the rest of the world," he said. 

"We design our budget for the people. We want to move forward with everyone. We have been giving priority to agriculture and employment generation. We are now giving priority to 'Made in Bangladesh'. The next budget will be responsible and transparent," Kamal said.

Mustafa Kamal said that the slight increase in fuel price will be borne by the consumers and the government. "It will not be imposed on the government or the consumer alone," he said.

"We have many alternative ways to deal with the economic crisis under the current global situation, and we will use those weapons as needed," the minister said.

Expressing hope, the finance minister said, "It's easy to deal with one problem at a time, rather than dealing with all at once. We will not fail."

"Even in times of crisis around the world, we have not adopted any policy of contraction. We are implementing policies of expansion. Many have suggested increasing the budget deficit further, but we have increased as much as we needed. However, our budget deficit is much lower than the rest of the world."

At the meeting, top media executives emphasised inflation control and foreign currency management.

Besides, the newspaper editors have made various recommendations including the reduction of corporate tax rate in the newspaper industry from existing 30% to 10-12% and reduction of import duty on newsprint paper in the next budget.

The editors also demanded additional allocation in the next budget to pay the long overdue advertisement bills of various government institutions.

In response, the finance minister assured to take care of the due advertisement bills.