Bangladesh’s foreign debt more than triples in 10 years

The total foreign debt held by Bangladesh rose 238% to $91.43 billion in 2021 from $27.05 billion in 2011, a World Bank report says.

Neighbouring India's external debt saw an 83% rise during the period, while Pakistan saw a 101% rise, and Sri Lanka 119%, adds the report titled "International Debt Report 2022" published on Tuesday.

Meanwhile, data obtained from the Bangladesh Bank shows the total external debt of the country climbed to $95.86 billion at the end of fiscal 2021-22.

Infographic: TBS

According to the World Bank report, Bangladesh's total external debt stocks were $73.50 billion in 2020.

The report says the long-term external debt of the country reached $70.04 billion in 2021, up from $60.41 billion a year ago. Of the amount, $62.4 billion was acquired by the public sector.

IMF credit and SDR allocation amounted to $3.30 billion in 2021, compared to $2.11 billion in 2020.

Meanwhile, short-term external debt rose 65% to $18.09 billion at the end of 2021 from $10.99 billion in the previous year.

Bangladesh's long-term disbursement rose to $13.78 billion in 2021 from $10.21 billion in 2020, with $9.36 billion constituted by the public sector, shows the World Bank report, adding that the country's long-term principal payments increased 47% year-on-year to reach $4.2 billion in 2021 and interest payments increased 26% to $1.08 billion.

Out of $1.08 billion in long-term interest payments, the public sector alone paid $985.4 million. 

The external debt-to-export ratio of the country had risen 51.7 percentage points to 190% in 2020 and declined to 183.5% in the following year. The external debt-to-export ratio is generally used for determining a particular country's debt load.

Debt interest payments by poorest countries rise 35%

Debt-service payments by the world's poorest countries on their public and publicly guaranteed debts are projected to rise by 35% to more than $62 billion this year to cover the extra cost of the Covid-19 pandemic and a dramatic rise in food import costs.

The World Bank is concerned that debt-service payments take away already scarce fiscal resources from health, education, social assistance, and infrastructure investment.

The global lender said payments scheduled for 2023 and 2024 are likely to remain elevated because of high-interest rates, maturing principal, and the compounding of interest on Debt Service Suspension Initiative deferrals.

The debt crisis the developing countries are facing has intensified, said World Bank President David Malpass, adding, "A comprehensive approach is needed to reduce debt, increase transparency, and facilitate swifter restructuring – so countries can focus on spending that supports growth and reduces poverty.

"Without it, many countries and their governments face a fiscal crisis and political instability, with millions of people falling into poverty."

At the end of 2021, the debt stock of low- and middle-income countries rose 5.6% to $9 trillion, of which International Development Association (IDA) countries owe nearly $1 trillion.