Due to uncertainty, foreign debt commitments are decreasing

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Due to uncertainty, foreign debt commitments are decreasing

Due to political-economic instability and uncertainty, foreign loan commitments are decreasing. It’s down to almost half. Along with loan commitments, disbursements have also fallen over the same period. The loan repayment amount has increased. This information has been informed by the Economic Relations Department (ERD).

According to ERD statistics, during the first five months (July-October) of the fiscal year 2024-2025, pledges of foreign loan assistance amounted to 522.268 million USD. During the same period in the last financial year (2023-2024), the loan commitments received were 585.91 million USD. As a percentage, loan commitments fell by 91 per cent in five months over a year. Grant commitments in the five months of 2024-2025 were $273.8 million and loan commitments were $248.8 million.

On the other hand, the grant pledge for the 2023-2024 fiscal year at this time was $28.63 million. The loan commitment was USD 557.27 million.

According to ERD statistics, during this period various development aid institutions have waived loans amounting to 1.54 billion 37 million US dollars in the 5 months of the current fiscal year. It was 211.7 million dollars during the same period last financial year. Cash discount fell by 27 percent during the period under discussion.

Loan commitments and concessions decreased but loan repayments increased by 28.44 percent during this period. In the fiscal year 2023-2024 July-October where the debt repayment expenditure was 1 thousand 464 crore 48 lakh US dollars (out of which the principal repayment expenditure was 846 crore 36 lakh US dollars and the interest expenditure was 618 crore 11 lakh dollars). In the 5 months of the current financial year, 2 thousand 42 billion 64 billion US dollars have been spent on debt repayment. Out of this, 1 thousand 259 crore 70 million US dollars were spent on debt repayment and 782 crore 94 million US dollars were spent on interest.

ERD sources said political unrest in July and August hampered project implementation, resulting in reduced disbursements. Many projects funded by foreign loans have stalled, as foreign consultants and staff were absent. The government is currently reviewing the loan proposals, which have been temporarily suspended for the new loan deal. Once the review is completed, the government plans to start the loan application process and strive to meet its targets. In addition, development partners including the World Bank and the Asian Development Bank (ADB) have expressed interest in financing various projects in Bangladesh.

Meanwhile, the current government is focusing on prioritizing the necessary projects for foreign funding and closing the unnecessary ones. ERD has directed the agencies to submit a list of priority projects for allocation of foreign loans, sources said.

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