Special Correspondent: A large part of foreign debt is being used to repay debt. The pressure to repay debt, including interest and principal, is increasing. In the first four months of the current 2024-25 fiscal year (July-October), the country had to repay more than the amount of foreign debt it received. However, commitments have decreased by about 90 percent compared to the same period of the last fiscal year. Repayments have also decreased.
The latest updated report of the Economic Relations Department (ERD) shows that in the first four months of the current fiscal year (July-October), foreign debt was forgiven by $1.2 billion. However, foreign debt had to be repaid during this period. $1.43 billion.
In July-October of the last fiscal year, $1.1 billion had to be repaid. This is $336.3 million more than the same period of this fiscal year. Of which, only actual repayments increased by $260 million. However, foreign debt commitments have decreased in the current fiscal year.
According to ERD sources, debt repayments for several major projects including Padma Rail Link, Metro Rail and Karnaphuli Tunnel have started in the current fiscal year. As a result, there has been a separate pressure on foreign debt repayments. However, except for Metro Rail, there is not much return coming from Padma Rail Link and Karnaphuli Tunnel. More is being spent on maintenance than what is being earned. As a result, the government has to repay the debt of these projects from its own funds.
In the last fiscal year (2023-24), a record $3.35 billion in debt had to be repaid. Which is $680 million more than the previous fiscal year. The government has not had to repay this amount of debt in any fiscal year before. The government last repaid $2.67 billion in fiscal year 2022-23.
ERD sources say that additional pressure has been created on debt repayments mainly due to the increase in interest rates. In the last fiscal year, interest payments alone increased by $410 million. Those concerned believe that this loan repayment amount will reach $4.5 billion in the current fiscal year.
Meanwhile, in the first four months of the current 2024-25 fiscal year, $254.5 million in loan commitments have been received from development partners. This was $3.6285 million in the same period of the previous fiscal year. That is, the commitments have decreased by 90 percent compared to the 2023-24 fiscal year.
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ERD officials said that the current interim government is reviewing the loan agreement proposals made during the previous government. Due to this, loan agreements with development partners are not being completed. However, they hope that the proposed loan process will start after the review and then the commitments will be realized as per the target.
Officials also say that after the formation of the interim government, the World Bank, Asian Development Bank (ADB) and various multilateral and bilateral development partners have given initial assurances of loan and budget support for various projects in Bangladesh. Loan agreements were signed for several projects this November.
