External debt per capita on the rise

The amount of foreign debt per capita rose by 6.8% in the fiscal 2019-20 compared to the previous financial year (2018-19).

The data was shared in the central bank's annual report titled "Foreign Direct Investment and External Debt", published on Monday.

The report says that in terms of population, the per capita debt in FY20 was $389.53, which is 6.8% higher than in FY19 when it was $364.60.

The total external debt stood at $65.27 billion in FY20, 8.1% up from the previous fiscal year.

Of the foreign loans taken in the last financial year, the government took $48.68 billion, the private sector took $14.08 billion and $2.5 billion was taken as Sovereign (Guaranteed) Debt.

Ahsan H Mansoor, executive director of the Policy Research Institute, opined that foreign debt is not very high in relation to Bangladesh's economic capacity.

He told The Business Standard that loans from foreign sources are cheaper than domestic ones. This puts less pressure on the government to meet the budget deficit.

He said a country combining domestic and foreign sources could borrow up to 50% of GDP.

Ahsan Mansoor stated that the amount of foreign loans in the private sector is also on the rise as the interest rate on foreign loans is lower than domestic sources.

However, we must make sure that the debt does not increase too much: if the value of money against the dollar decreases any further, the cost of repaying long-term debt will be higher.