Govt grappling with repayments

The interim government is under tremendous pressure to pay off hefty foreign debt taken by the ousted Sheikh Hasina government as more than half-a-billion-dollar debt has already been served in the past two months.
Officials on Monday said the government has repaid $589.22 million worth of interest and principal against the outstanding foreign debt, throwing the government's balance sheet into the negative trajectory.
It has served $589.22 million loan during the July-August period this fiscal year (FY), 2024-2025, against the outstanding loan.
The country received $458.24-million credit from external lenders, including the World Bank, the Asian Development Bank and the JICA, according to the data available with the Economics Relations Division (ERD).
During the correspondent period of FY24, Bangladesh repaid $400.50-million foreign debt against different medium- to long-term external loans and it received $739.07 million worth of foreign aid.
During the July-August period this FY25, foreign aid disbursement has dropped by 61.28 per cent to $458.24 million, showed the data.
Again, during the same period in FY24, development partners released $739.07 million worth of loans and grants for the development of Bangladesh, according to ERD statistics.
During the 12-month period of FY24, the government had also paid some $3.36 billion in total foreign debt interest and principal.
Although debt repayment has surged enormously, ERD officials said, foreign aid disbursement and commitment have not increased much, disclosed the official statistics.
The higher rate of interest payment for many non-concessional medium- to long-term loans (MLTs) and the grace period ending of some big loans have boosted foreign debt servicing during the July-May period of FY24, ERD officials said.
An FE analysis has found that debt repayments against outstanding foreign loans have jumped significantly mainly due to the record highest amount of interest payments.
Out of the $589.22-million debt servicing during the July-August period this fiscal, $173.60 million was repaid as interest and the remaining $415.62 million as the principal amount of the loans.
During the same period in FY24, Bangladesh repaid $146.39 million as interest and $254.11 million as principal for the same, further showed the ERD data.
Meanwhile, the rise in MLT loans and higher payment trends have already created further pressure on the country's struggling foreign-exchange reserves, the FE analysis has found.
Up until July 2024, according to the central bank, Bangladesh's public and private sector debt to external sources has been recorded at an estimated $100 billion.
ERD data disclosed that development partners made a commitment of $20.16 million worth of loan and grants during the July-August period.
They confirmed $1.14 billion worth of loans and grants during the same period in FY24.

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