Rising Overseas Debt Repayment Hits Tk 37,307 Crore in FY24, More Than Tripled in Three Years
The overseas debt repayment in Bangladesh has been a growing concern, with the amount hitting a record high in the recently concluded fiscal year. The Economic Relations Division’s updated report revealed that more than three times the amount was paid in FY24 compared to three years ago, totaling Tk 37,307 crore.
One of the key factors contributing to the increase in overseas debt repayment is the devaluation of the local currency over the past two years. This, coupled with the growing interest payment against the loan spree of the past decade, has led to a significant rise in the amount owed.
Interest payment alone grew by 58 per cent in FY24, highlighting the financial strain faced by the government. The outstanding foreign debt has also more than doubled in seven years, reaching $79.69 billion by March 2024.
The government’s borrowing has been attributed to the implementation of large-scale development projects such as the Roopur Nuclear Power Plant and the Padma Bridge Rail Link Project. However, the pressure for growing overseas debt payment is evident, especially with the devaluation of the local currency and the shortage of forex reserves.
The government’s revenue shortage has further reduced its loan repayment capacity, leading to the need for additional borrowing. The new medium-term debt strategy for FY25 to FY27 has identified several risks that may impact debt management, including inflation, exchange rates, and fiscal position.
Despite efforts to decrease the total debt as a percentage of GDP in previous years, the trend has been on the rise, reaching 36.0 per cent in FY23. At the end of FY24, domestic debt is projected to be 56 per cent of the total debt stock, highlighting the need for a strategic approach to debt management.
In conclusion, the growing overseas debt repayment in Bangladesh is a complex issue that requires careful planning and management. With various economic risks at play, it is crucial for the government to address the challenges effectively to ensure sustainable debt management in the future.
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