Bangladesh’s Finance Minister, Amir Khosru Mahmud Chowdhury, informed parliament that the country’s total external debt hit $78.22 billion by March this year. He cautioned that the nation’s debt-servicing responsibilities are expected to escalate in the future. The minister disclosed that 61.97% of the external debt is concessional, while 38.03% is non-concessional, as reported by The Business Standard based in Dhaka.
The minister highlighted a decline in highly concessional financing access after Bangladesh transitioned from a low-income to a lower-middle-income status, according to a World Bank evaluation. He emphasized that the increasing foreign borrowing will amplify the burden of future principal and interest repayments. Additionally, the government has implemented precautionary measures to ensure sustainable debt management.
Amir Khosru Mahmud Chowdhury mentioned that new foreign loans and associated development projects are undergoing stringent scrutiny to prevent unnecessary or low-priority projects from being financed through high-interest external borrowing. The government is focusing solely on projects with high economic returns for foreign financing, as stated in the media report quoting the minister. Moreover, efforts are being made to enhance monitoring of foreign-funded projects to tackle the persistent issues of project delays and cost overruns.
Furthermore, the government is revising its Medium-Term Debt Management Strategy (MTDS) and conducting a Debt Sustainability Analysis (DSA) to fortify the resilience and sustainability of public debt management. Recent assessments suggested that potential losses from corruption, overpricing, inefficiency, and systemic extraction could surpass the country’s budget deficit. The National Board of Revenue has set a collection target of around Tk 6 lakh crore for the nation, but analysts have cautioned about recurring significant shortfalls.
The government has proposed a budget of approximately Tk 9.3 lakh crore and estimated a fiscal deficit of about Tk 2.43 lakh crore, equivalent to roughly 3.7% of GDP.
