'Bangladesh awaits big shock from debt liabilities of mega projects'
Bangladesh is in for a big shock from the debt liabilities of the mega projects between 2024 and 2026 as the time of foreign loan repayment is nearing and is a concern for the economy.
Noted economist and distinguished fellow of the Center for Policy Dialogue (CPD) Debapriya Bhattacharya came up with this remark while talking to reporters on Thursday.
He said a proper plan is needed to deal with this situation.
The public policy analyst talked about some 20 mega projects undertaken in Bangladesh over the last few years. Currently, the annual repayment of foreign loans is equal to 1.1 per cent of the gross domestic product (GDP) and the ratio may double by 2026.
Asked whether the country would be in trouble or not, he said it would actually depend on the state of the forex reserve and the economic integrity.
Bangladesh will mostly be repaying Russia, China and Japan for the mega projects. The repayment period is remarkably shorter for the loans from China.
Debapriya Bhattacharya analysed 20 major projects, including the Padma Bridge, Rooppur nuclear power plant, Karnaphuli tunnel, Matarbari coal-fired power plant, metro rail, and the rail project on the Padma Bridge.
Around Tk 5569.55 billion is being spent to implement these mega projects and foreign loans compose 62 per cent of the total spendings.
He said a kind of national consensus for undertaking mega projects has been witnessed in the country since 2009. Politicians show interest in such projects as they can present these as visible development.
The projects are scheduled to be completed by 2028. But Debapriya believes that it will not be possible to finish the projects within the current decade. He also thinks that there is a lack of transparency and accountability in the implementation process of the projects.
However, he termed the recent talks with the International Monetary Fund (IMF) as a good development in the current economic phenomenon.
He said whether it is $2 billion or $4.5 billion - there is a need to avail funds from IMF. This will help stabilise the economy in the medium term and help control inflation. Besides, foreign investors and development partners will gain a kind of confidence as they think that the IMF kept Bangladesh under a kind of monitoring and surveillance.
He illustrated his point of view by the decision of Sri Lanka not to take IMF loans amid the economic crisis.
Finance minister AHM Mustafa Kamal on Wednesday said there is no need for foreign loans at the moment. The country will take IMF loans if it feels necessary.