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Finance Minister Amir Khosru Mahmud Chowdhury informed the Jatiya Sangsad (National Parliament) that the country’s foreign debt has reached 78.22 billion US dollars. He warned that this large amount of debt would further increase the pressure to repay both principal and interest in the coming years.
The Finance Minister presented this information on Wednesday (June 24) during the question-and-answer session on the 14th day of the 13th National Parliament’s second and first budget session.
In response to a written question from Jamalpur-3 constituency Member of Parliament Mostafizur Rahman Bablu, he stated that as of March this year, Bangladesh’s total foreign debt stood at 78,223.448 million US dollars.
The Finance Minister said that out of the total foreign debt, 61.97 percent consists of concessional loans (easy-term loans) and 38.03 percent consists of non-concessional loans (relatively difficult-term loans). While concessional loans have lower interest rates and longer repayment periods, the higher interest rates on non-concessional loans could increase repayment pressure in the future.
Regarding the existing challenges in foreign debt management, the Finance Minister stated that since Bangladesh’s graduation from a low-income country to a lower-middle-income country in 2015, the opportunities to receive concessional loans from international development partners have gradually decreased. Simultaneously, the government’s foreign borrowing has significantly increased. Consequently, a large amount of money will have to be spent on repaying loan installments and interest in the coming years.
He also mentioned that the government has taken several precautionary measures to tackle this situation. In the case of new foreign loans, loan proposals and related projects are being rigorously scrutinized to prevent the implementation of unnecessary or less critical projects with high-interest loans.
He further stated that foreign loans are being considered only for projects that have high economic benefits or economic returns. Concurrently, intensive monitoring has been strengthened to prevent time and cost overruns in projects implemented with foreign loans.
The Finance Minister informed that the government’s Medium-Term Debt Management Strategy (MTDS) is being updated. Additionally, Debt Sustainability Analysis (DSA) is being conducted to make debt management more sustainable and resilient.
He added that work on formulating institutional and legal reform plans would soon begin to improve the overall quality of public debt management.