External loan up by 15pc last FY

Bangladesh's external loan increased in the last fiscal standing at $44.10 billion (almost Tk 3, 74,898 crore) due to spending on ongoing development project costs.

It was 14.60 percent or $5.62 billion higher than that in fiscal 2018-19.

This figure was $38.48 billion in 2018-19 fiscal, according to a review of the report of the Economic Relations Department (ERD).

Experts said the country’s external loan has increased rapidly as the government has taken up several development projects including some constructional projects for achieving the developed country status targeted by 2041.

Although the amount of loans has increased, the country’s earnings have increased as well, they added.  

Repayment capacity has also increased due to higher remittance inflow and steady export earnings, they mentioned.

In this regard, Kazi Shafiqul Azam, former senior secretary of ERD, said, “We have enough demand for loans and we also have the capacity. More loans can be borrowed.”

However, loans should be taken in important sectors including education, health and important infrastructure, which will bring higher returns, he mentioned.

At the same time, it is very important to complete the implementation of the project in time including stopping irregularities and corruption in their implementation, he said adding, “If the implementation is delayed, the cost increases and the facility is not available from the project in time.”

Dr Zahid Hossain, former lead economist of the World Bank Dhaka office said, “It was increasing interest or conditional loans more than before. But most of the current status of loans is easy terms and long term loans.”

According to the World Bank and IMA, Bangladesh is far below the standard of debt holding of a country, he mentioned. 

So the risk of not being able to repay the loan is less, he said adding, no such thing has happened in the past, it may not happen in the future.

“If GDP growth continues, there is less risk of financial disaster, debt trap or loss of lender confidence. But the main thing is that the loan management and use must be correct,” he mentioned.

According to ERD's latest 'Flow of External Resources in Bangladesh' report, Belgium, France, Japan, Switzerland, USA, South Korea, Denmark and Germany or KFW have $825.10 crore.

In addition, the World Bank, the Asian Development Bank (ADB), the Islamic Development Bank (IDB), IFAD, OPEC, the Asian Infrastructure Investment Bank (AIIB) and the European Investment Bank (EIB) together have a total debt balance of $2,910.48 crore.

Apart from these, China, India, Spain, Yugoslavia, Russia and Belarus together have a total debt balance of 513.59 crore and another 127.94 crore has been taken from China as Suppliers Credit. 

However, ERD thinks that even if it takes a loan at a higher interest rate, it is not risky as yet.

The country's disbursements (long-term) increased rapidly by 339.53 percent, principal repayments (long-term) 153.21 percent, and interest payments (long-term) 251.15 percent.

The Bangladesh government repaid $1.34 billion to external lenders in the first 10 months of 2018-19 fiscal year.

This figure increased by 14.4 percent than the amount paid during the corresponding period a year ago.

Bangladesh repaid $1.2 billion to its foreign lenders in 2017-18, according to the latest report.

The country's foreign borrowing was $51.83 billion from independence till June 30, 2018. 

The government repaid $21.98 billion as of April last year.