Foreign debt servicing crossed $3 bln in 2023-24 fiscal: ERD

Bangladesh’s foreign debt repayment has crossed US$3.0 billion for the first time in a single fiscal year in FY 2023–24, of which around $1.0 billion is interest.

In the recently concluded FY 2023–24, the country has to pay around $3.36 billion in total foreign debt interest and principal.

The principal amount paid is $2.01 billion, and the interest amount is approximately $1.35 billion.

This information was found in the report that the Economic Relations Division (ERD) published on Sunday, on the updated situation of foreign debt for the outgoing fiscal year.

The ERD statistics show that both principal and interest payments on loans have increased significantly over the span of a year. This increase is 25 per cent compared to last fiscal year. Bangladesh paid $2.68 billion in interest and principal in FY 2022-23.

Loan repayments have increased the most in the last two years. This pressure to repay foreign loans has started at a time when the country is facing a long-standing foreign exchange crisis.

Analysts believe that additional pressure is being created on the foreign exchange reserves and budget due to the extra money spent on foreign debt repayment.

According to ERD, interest expenses increased at a faster pace than the actual repayment of foreign debt in the last fiscal year.

In FY 2023-24, actual payments increased by $280 million, or 16 per cent, over the previous fiscal year. In FY 2022-23, Bangladesh repaid $1.73 billion as principal amount of foreign debt.

On the other hand, interest payments have increased by 45 per cent in a span of one year. In the last fiscal year, the interest payment had to spend an additional $42 million.

Around $930 million had to be spent on interest for the financial year 2022-23. For the first time in the outgoing fiscal year, interest expenses alone exceeded $1.0 billion.

According to ERD data, the foreign debt received was around $9.86 billion during the 2023-24 fiscal. This was an increase of approximately $650 million over the previous fiscal, 2022-23, when development partners released $9.21 billion.

Meanwhile, in the FY 2023-24, lending institutions and countries pledged $1.72 billion as loans.