Repayment of foreign debts tops $3bn in 11 months

Despite no appreciable increase in foreign loan disbursements over the first 11 months of the 2023–24 fiscal year (FY24), the repayment of foreign debts has exceeded USD 3 billion. The demand to pay back the foreign debts has generally intensified and will continue to do so in the days ahead.

The Economic Relations Division (ERD) reports that from July to May of this fiscal year, Bangladesh paid back almost USD 3.07 billion in principal and interest for the first time. This is a 25% increase, or USD 600 million, over the previous fiscal year. In the most recent fiscal year, a total of USD 2.68 billion was repaid in foreign debt.

The most current report on foreign indebtedness published by the ERD disclosed this. According to a forecast created by the finance ministry, pressure would increase in the upcoming years to repay foreign debt.

Experts stated that the increased spending on loan repayments is putting additional strain on the budget and foreign currency reserves. The pressure on international debt repayments began during the ongoing dollar crisis.

The Policy Research Institute of Bangladesh (PRIB) executive director, Ahsan H. Mansur, stated that in order to address the condition of repaying foreign debts, macroeconomics must be stable and that attention should be paid to the currency exchange rate to prevent additional increases.

Besides, exports must be increased, he said adding, that more scrutiny should be carried out on more loans from China and Russia. Overall, foreign reserves will have to be increased, and if the situation continues as it has been over the last two years, it will be very difficult to tackle the matter in the near future.

Ahsan H Mansur also presents the reality of Bangladesh receiving foreign loans. He said, “At present, we are running low on money and we have no option to choose because we must maintain the reserves for the next one or two years. We must bring dollars wherever we find it – it can be from the World Bank to China and Russia though we have been in a dilemma to this end.”

Officials who are aware of the foreign debt situation believe that short-term loans from China and Russia are putting increasing pressure on loan repayment. In the meantime, debt repayments for the metro rail project and the Rooppur Nuclear Power Plant project have already begun, and pressure will increase as loan repayments for other large-scale projects begin in the coming two to three years.