Bangladesh's total foreign debts snowballed to some US$65 billion, as of February, enlarging the servicing liability to the external lenders, officials say, thus increasing strains on the national budget.
In the foreign debts, general government's unpaid loan is $56.62 billion while the state-owned enterprises' (SoEs) outstanding loan was some $8.5 billion, latest Economic Relations Division (ERD) statistics show.
The FE in an analysis finds that the per-capita external debt of Bangladesh people has stood at some $387 till February this fiscal.
And the loan buildup has been rising at a higher rate in recent years as many of the repayment schedules had already started.
Economists say although Bangladesh is still in a comfortable zone, but its rising foreign debt outstanding with the ballooning hard-term loans might create pressure on fiscal management in the future.
They point out that after graduating as a developing nation in 2026, Bangladesh will no more get concessional loans from the foreign development partners, which would put pressure on the national budget for the repayment obligation.
Bangladesh government usually borrows medium- to long-term loans (MLTs) from the foreign development partners to develop infrastructure and the socioeconomic condition of the country.
Besides, some SoEs and public limited companies, including Bangladesh Biman, Shipping Corporation, BCIC, Bangladesh Telecom-munication Regulatory Commission (BTRC), Bang-ladesh Petroleum Corpora-tion, Power Division and its agencies, Telecom-munications Authority, borrow short- to medium-term loans for funding their development works and operations.
Both government's MLT and SoEs' loans are treated as government's external debt.
The FE analysis sees that the external debt has been on the rise, year on year, over the last few years as the government borrowing is jumping at higher rate.
Five years ago in FY2017, the government's total external debt was $32.07 billion which rose to $38.23 billion in FY2018 in a 19-per cent year-on-year rise, ERD data show.
In the following FY2019, the debt overhang rose to $44.48 billion in a 16.35-per cent increase over the previous year's amount.
The debt rose by 14.95 per cent to $51.13 billion in FY2020 and by 17.64 per cent to $60.15 billion in the last FY2021.
Till February this FY2022, the foreign debt had stood at $64.91 billion, according to the ERD data.
Meanwhile, the debt servicing against the external outstanding loans is swelling at a higher rate, government data show.
The government repaid US$1.34 billion in first eight months of the current fiscal year (FY) 2021-22 against its outstanding loans, 12.44-percent higher than the corresponding period, ERD data show.
In the same period (July-February) last FY2021, the government had served $1.18 billion worth of debt -- the principal and interest combined -- against the MLT outstanding foreign loans.
"The debt servicing against the outstanding loans will be rising in the coming days as the grace periods of many big loans will be over. Within next 2-3 years, a big chunk of foreign exchange will be repatriated for the external debt-servicing purpose," says a senior ERD official.
He foresees that the debt servicing would get another big boost after four years when the interest payment along with the principal amount to Russia for its $12 billion lending will start.
According to the ERD, the government paid a total amount of US$1.91 billion against foreign debts to the development partners in the last FY2021.
In the previous FY2020, Bangladesh served $1.73 billion against its MLTs followed by $1.59 billion in FY2019, and $1.41 billion in FY2018, the ERD shows.
Another ERD official says the net aid inflow could come under contraction pressure in the coming days as repayment for most of the large loans, especially of the megaprojects, will be started within next 2-5 years.
Centre for Policy Dialogue (CPD) Research Director Dr KG Moazzem told the FE that Bangladesh's borrowing is still in the comfortable level in terms of GDP.
"But the question is whether the government is being able to utilise the foreign loans in a proper way or for getting highest returns," he adds.
In most cases, the foreign loans which are invested for large project development are not getting better outputs, the policy researcher notes.
He suggests better utilization of the borrowed money to get better outcome of the investments which would reduce the debt burden on the national budget.
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