External debt surges past $100b mark
Economist Zahid Hussain, however, thinks the country’s foreign debt is not too high in proportion to GDP size
Bangladesh's external debt has surpassed the $100-billion mark for the first time, primarily driven by government borrowing to fund various development initiatives, including large-scale projects.
According to recent data released by the Bangladesh Bank, as of December last year, the country's foreign debt stood at $100.64 billion, marking an increase from $96.55 billion recorded in the previous quarter.
Nearly 80% of this external debt was taken by the government and the remaining 20% was sourced by the private sector, as per Bangladesh Bank statistics.
The nation's overall foreign debt experienced a notable increase over the past year, despite a decrease in private-sector borrowing. This surge is primarily attributed to the government's significant borrowing from foreign sources, which rose by $7.48 billion in 2023.
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With borrowing on the rise, the pressure on repayments is also intensifying. In fiscal year 2022-23, the government repaid $2.79 billion in principal and interest to foreign lenders. The figure is projected to exceed $3.65 billion by the end of the current fiscal year. Looking ahead, the repayment burden is estimated to soar to $4.21 billion in the next fiscal year, according to assessments provided by the finance ministry.
Zahid Hussain, former lead economist of the World Bank's Dhaka office, however, told TBS, "Our $100 billion foreign debt is not too high in proportion to the size of our GDP. Many countries with similar GDPs have higher external debts than ours."
However, the source of the loans and the terms on which these were taken are a cause for concern, he said. "If we fail to meet the conditions, we may face difficulties in the future."
He also said, "We must ensure that the loans are used properly and that we generate income from them. Otherwise, we will not be able to repay the loans on time. If we fail to implement projects on time and complete their work within the initial budget, we may face difficulties.
"Therefore, we need to increase our dollar income alongside our foreign debt. Otherwise, it will be distressing in the future."
Bangladesh's external debt has increased by over 200% over the last decade from $29.3 billion in June 2013 to $100 billion by December 2023.
