Bangladesh’s foreign debt repayment soars



| Update:
March 24, 2022 8:03:53 PM


External debt service intensity has increased significantly, with payments 13.56% higher in the first eight months of the current fiscal year (FY2021-22) than in the same period of the fiscal year previous, officials said Wednesday.

The country repaid $1.34 billion in principal and interest on its outstanding medium- and long-term (MLT) external loans during the July-February period this fiscal year, compared to $1.18 billion in the same period of the previous year, Economic Relations Division (ERD) data shown.

“The magnitude of external debt service will increase in the coming days as the grace period for many large loans expires. Over the next 2-3 years, a large part of the repayment will have to be made,” said a senior ERD official.

He added that the amount would increase significantly after 4 years when the repayment of the $12 billion Russian loan taken against the Rooppur Nuclear Power Plant (RNPP) would start.

According to the ERD, the government repaid US$1.91 billion in external debts in the last fiscal year.

In FY2020, Bangladesh paid $1.73 billion against its MLTs, followed by $1.59 billion in FY2019 and $1.41 billion in FY2020. financial year 2018, according to ERD data.

Another DRE official said the net inflow of aid would be contracted in the coming days as repayment of most large loans, especially mega projects, will start in the next 2-5 years.

“When annual disbursements of large foreign loans against some mega-projects like the RNPP project decline or end, net foreign lending will come under additional pressure,” he told the EF, speaking on condition of anonymity.

He said debt service started to swell from fiscal year 2017 when the government repaid $1.12 billion on outstanding loans, and debt service gradually increased over the years. subsequent years at progressive rates. Meanwhile, development partners disbursed $5.89 billion in foreign loans in the July-February period of the current fiscal year, according to ERD data.

The amount was 58% higher than the $3.73 billion disbursed during the corresponding period last year.

Of this total, Bangladesh received $5.74 billion in loans and $156.59 million in grants during the July-February period of this fiscal year.

The DRE official said aid disbursement had increased due to an impressive release of funds by the second largest multilateral development partner, the Asian Development Bank (AfDB), in the first eight month.

The Manila-based lender alone disbursed $1.85 billion, the biggest portfolio in a year, he added.

Additionally, Japan has released an impressive $1.27 billion in aid during the July-February period of the current fiscal year. Bangladesh’s largest multilateral lender, the World Bank, disbursed $711 million in MLT during the same period, according to ERD data.

Meanwhile, external development partners have pledged $4.84 billion in loans and grants in the first eight months of fiscal 2022, up $882 million from those in the same period. of the 2021 financial year.

Of the $4.84 billion commitment, development partners have confirmed $4.69 billion in loans and $150.66 million in grants for the July-February period.

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Tana T. Thorsen