Govt to accept foreign loans only for critical projects: Planning Adviser

Planning Adviser Dr Wahiduddin Mahmud today (25 January) said the government is moving away from financing large-scale development projects through foreign loans and stressed the need for avoiding a 'debt trap'.

"We do not want to take loans for big projects unnecessarily. Institutions like the World Bank often come with many project proposals. If some are genuinely high priority, we may consider them. But these issues are now being discussed and assessed very carefully," he told reporters after an ECNEC meeting.

The adviser said the government will accept loan-funded projects only if they are of critical national priority and cannot be financed or implemented with domestic resources or expertise. He noted that some initiatives, such as pollution monitoring, do not justify large loans or foreign consultants.

"Measuring pollution is not that difficult. The instruments involved are not extraordinarily complex. There is no need to take large foreign loans for such purposes," he said.

He added that as Bangladesh prepares for LDC graduation, interest rates on foreign loans are rising, making them more expensive and underscored the importance of relying on domestic capacity.

The adviser also warned against attractive but unnecessary projects offered by multilateral lenders like the World Bank and the Asian Development Bank (ADB).

"We will take only those loan projects that are truly necessary, where foreign support is genuinely required. Everything else should be done with our own resources, even if on a smaller scale," he said. He also highlighted the government's intention to reduce long-standing dependence on loans in social sectors, including education.

"There is no point in becoming trapped in a vicious cycle of debt. We want to move away from heavy reliance on loans in all sectors," he added.