External Debt Repayment is Projected to Double in 3 Years

External Debt Repayment Is Projected To Double In 3 Years

According to the Economic Relations Division (ERD), Bangladesh’s external debt repayment rate will double in the next three years. Bangladesh has already repaid external debt of $2 billion in FY 2021-22 and the repayment rate is about to hit $4 billion in FY 2024-25. Although it’s pushing the country towards a decline in GDP percentage, the external debt has also been raising in out-and-out terms.

A report from ERD’s debt sustainability analysis revealed that the repayment distribution ratio for the FY 2021–22 was 20.84 percent. The external debt percentage in GDP is 12.94 in FY 21, which was 13.36 in FY20 and 14.71 in FY19. As the loan amount is below 40 percent of the GDP, it’s another positive outcome.

On Sunday, Sept 18, a conference was held by ERD in Sher-E-Bangla nagar and a presentation titled “Negotiation tactics of development financing” was presented there. ERD Additional Secretary Abdul Baki commented on the declining external debt by saying, “Our external debt is sustainable in the short- and medium-term perspective.”

He also added, “To keep borrowing costs in check and guarantee the intended impact of a project, project aid needs to be disbursed more quickly. The disbursement percentage ought to be at least 25% of the whole stock of external debt.”

Other ERD officials were present there and they asked the government to be cautious while choosing loan and payment currency. As per a report by June 30, SDR accounts for 41 percent of Bangladesh’s total external debt which is the currency form for IMF. From the rest, 32 percent of outstanding debt stands in US Dollar , 18 percent in Japanese Yen, 3 percent in Euro and 6 percent is distributed in multiple currencies.

As per the report, Bangladesh’s total outstanding external debt is $56.66 billion where 76.95 percent is at fixed rate and 23.05 percent is drifting.

Planning Minister M.A Mannan was present at the ERD event and shared his thoughts about foreign loans. He said, “Bangladesh is gradually gaining capacity to handle foreign loans and the amount of the country’s soft loans has been decreasing with time. The country has developed a lot since 1972 where foreign loans played a key role. THere is nothing to be feared about foreign loans. There is no alternative to taking loans from external sources for the development of a country.” However, the planning minister requested everyone to be alert about proper use of any foreign loans.

Shamsul Alam, The State Minister for Planning, was also at the event and said, “The government has disbursed $10 billion of foreign loans in June of current year and has $48 billion in the pipeline.” Cabinet Secretary Khandker Anwarul Islam, ERD Secretary Sharifa Khan and Planning Secretary Md Mamun-Al-Rashid also spoke.

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