Foreign debt repayment exceeds USD 3.5b in 9 months

Pressure from foreign debt repayment continues to mount, with more than USD 3.5 billion spent on servicing principal and interest payments to donors such as the World Bank, Asian Development Bank (ADB), and Japan in the first nine months (July–March) of the current fiscal year alone.

Repayments of principal and interest are rising in tandem with the disbursement of foreign loans.

On Thursday, the Economic Relations Division (ERD) released its updated report on the foreign loan situation for July–March. It shows that during these nine months, Bangladesh repaid USD 3.525 billion to various lending agencies and countries against previously taken loans. During the same period, foreign loans and grants totaled USD 3.89 billion.

The government takes loans from donors to finance projects under the Annual Development Programme (ADP), and the ERD maintains these accounts.

Alongside foreign borrowing, borrowing from domestic sources—particularly the banking system—has also increased.

To cover the budget deficit, more than Tk 1 trillion was borrowed from the banking system in the first nine months of the fiscal year.

After partial repayments, the outstanding amount has come down to Tk 930 billion. As a result, the pressure of servicing both foreign and domestic debt is rising.

The burden of foreign debt repayment has been increasing for several years. In the last fiscal year, repayments exceeded USD 4 billion for the first time. Bangladesh repaid a total of USD 4.09 billion in interest and principal, compared with USD 3.37 billion in the previous fiscal year.
Concerned officials believe that if the current trend continues, total foreign debt repayment this year could surpass USD 5 billion.

According to the ERD report, in the first nine months of the current fiscal year, the government repaid USD 2.2764 billion in principal and USD 1.25 billion in interest. On the other hand, USD 3.5 billion was received as loans and USD 380 million as grants.

ERD sources said Bangladesh received USD 2.8 billion in loan commitments during the nine-month period, compared with USD 3 billion in the same period of the previous fiscal year.

Russia disbursed the highest amount in the past nine months, providing about USD 830 million. It was followed by the World Bank with USD 765 million, and the Asian Development Bank with about USD 610 million. China and India disbursed USD 520 million and USD 240 million respectively, while Japan provided USD 310 million.

The government borrows loans and receives grants from various development partners to implement projects through the budget.

In addition, it is taking USD 4.7 billion in budget support loans. Development partners also extend loans to the private sector.