Foreign loan repayment rises 13% in Jul-Aug
Bangladesh repays $667m in principal, interest
Bangladesh's repayment of foreign loans surged 13.21% in the first two months of the current fiscal year, according to data from the Economic Relations Division (ERD) released today (28 September).
Between July and August, the government paid $667.11 million in principal and interest on various development loans, up from $589.22 million during the same period last year.
Of this amount, $488.79 million went towards principal repayment, a 17.60% increase from $415.62 million in July-August last fiscal. Interest payments rose 2.71% to $178.32 million, compared with $173.60 million in the same period last year.
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ERD officials said Bangladesh has taken large foreign loans over time, and the grace periods on many projects have ended, prompting rising repayments.
Repayment pressure will continue to increase in the coming years, they added.
Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development (InM), said rising repayments reflect the start of repayment schedules on loans taken by previous governments for development projects and budget support.
"Many loans resemble commercial borrowing, with short grace periods, higher interest rates, and faster repayment schedules. Limited revenue growth has increased reliance on foreign loans," he noted.
Mujeri the government needs to boost export earnings and remittances to ensure Bangladesh avoids default on foreign obligations.
ERD expects total foreign loan repayments for the fiscal year to approach $5 billion, up from $4.086 billion last year, including principal and interest.
The ERD report also shows both loan disbursements and development partner commitments increased in July-August compared with last year. Political unrest during the student uprising last year had slowed development project implementation, limiting loan disbursements and commitments.
Foreign loan disbursements rose 63.69%, from $458.24 million last year to $750.06 million this year. Development partner commitments jumped 1,109%, from $20.16 million to $243.81 million.
Among lenders, Russia disbursed the most, releasing $315.40 million for Bangladesh's largest expenditure, the Rooppur project. Other major disbursements came from the World Bank ($253.52 million), ADB ($99.12 million), Japan ($20.71 million), and India ($20.95 million). In terms of commitments, the largest was $150 million, with $9.94 million from the World Bank.
