Bangladesh’s external debt repayment to double in 3 years

Bangladesh paid $2.02 billion to its external creditors in fiscal 2021-22. Of the amount, $1.53 billion was principal and $492 million interest.

According to a document of the Economic Relations Division (ERD), the country’s external debt servicing would jump to $4.02 billion in fiscal 2024-25, meaning that the repayment would double in a span of three years.

ERD data shows Bangladesh had paid $1.12 billion for external debt servicing in fiscal 2016-17 and it took five years to double the repayment to $2.02 billion in fiscal 2021-22.

ERD, which mobilises external resources for Bangladesh from multilateral and bilateral development partners for the implementation of development projects, disclosed the data at a programme on “Foreign Assistance Management: Present Scenario” held at the NEC on Sunday.

Planning Minister MA Mannan spoke with the journalists after the meeting. He said there is nothing wrong with taking loans from domestic and international sources as every country borrows to implement development works.

“But we have to be judicious in borrowing and spending as well,” Mannan said. “The loans we are taking now have to be paid by next generations,” he commented.

ERD data shows multilateral and bilateral development partners committed $169.49 billion of loans to Bangladesh from 1971-72 to 2021-22. Of the amount, $111.38 billion was disbursed and $48.54 billion remained undisbursed.

Bangladesh’s present outstanding debt stands at $56.66 billion and the weighted average interest rate of these loans is 1.5 percent. The average grace period and maturity of these loans are 7.6 years and 28 years respectively, according to ERD.

World Bank is the major development partner with a 32 percent contribution to Bangladesh’s outstanding debt liabilities, followed by the Asian Development Bank with 24 percent and Japan with 18 percent.

This low-cost loan from external sources helps Bangladesh meet its budget deficit. ERD data shows the country’s budget deficit was 5.1 percent of GDP in fiscal 2021-22, of which 2 percentage points came from external creditors.