Bangladesh’s external debt has surged beyond $100 billion, reaching $100.64 billion by December’s end, as per Bangladesh Bank’s recent disclosure. This slight uptick from approximately $99 billion six months earlier underscores a marginal rise of $1 billion in foreign debt within this period.
Despite this escalation, authorities maintain optimism, citing ample room for further borrowing. Md Mezbaul Haque, executive director of Bangladesh Bank, reassures, emphasizing that the current foreign debt, constituting about 23% of the nation’s GDP, signifies substantial borrowing capacity.
However, experts caution against complacency, highlighting the importance of maintaining debt sustainability. According to IMF benchmarks, foreign debt should ideally remain below 40% of GDP.
The fiscal year 2022-23 witnessed significant lending from global entities like the World Bank, Japan, Asian Development Bank (ADB), and notably, China, indicating a burgeoning partnership. The government channels these funds into ambitious projects such as the Rooppur Nuclear Power Plant and Padma Bridge Rail Link, among others.
Yet, alongside external debt, domestic borrowing poses challenges, with government debt amounting to $147.8 billion by the last fiscal year’s close. Dr Ahsan H Mansur, executive director of Policy Research Institute (PRI), warns of mounting pressure on debt repayment, urging fundamental reforms in revenue generation to mitigate risks.
As debt-to-revenue ratios soar, experts stress the urgency of bolstering revenue collection and rationalizing expenditures to ensure economic resilience. Dr Mustafizur Rahman, distinguished fellow at the Center for Policy Dialogue (CPD), underscores the need for prudent financial management amidst concerns over a looming dollar crisis.
While loans predominantly serve the public sector, with 85% being long-term, private sector debt also contributes significantly. Despite recent fluctuations, Bangladesh’s foreign debt trajectory remains on an upward trajectory, highlighting the need for sustainable fiscal policies to navigate future challenges.
