The payment of interest by the government against foreign loans became more than double in the first 10 months of the outgoing FY24 against the backdrop dollar shortage.聽聽 聽聽聽聽
The payment of interest surged to $1,148.05 million between July and April of FY24 from $569 million during the same period of FY23, marking an increase of 101 per cent, according to the monthly update of the Economic Relations Division.
The payment of principle amount against the foreign loan in the first ten months of FY24 stood $1,663.70 million, compared to $1382.76 million during the same period of FY23, recording a growth of around 23 per cent.
The ERD officials attributed the increase in borrowing from foreign sources to implement development projects for the quick rise in payment for interest.
Interest has to be paid from the next month after incurring the loan while the principal amount after certain period, said the officials.
The government鈥檚 outstanding foreign debt stood at $62.4 billion in FY23, marking a more than threefold increase in 14 years.
The government has been implementation of mega projects such as the Roopur Nuclear Power Plant, the Padma Bridge Rail Link Project, the Karnaphuli River Underneath Tunnel, the Metro Rail Line Project, the LNG Terminal in Maheshkhali, and Payra Sea Port with borrowing from foreign sources.
Policy Research Institute executive director Ahsan H Mansur said the pressure on interest payment would increase in the new financial year from July.
Even the government may require restructuring of debt repayment amid the shortage of dollars, he said.
The country has been facing shortage of dollar since April 2022 amid the economic downtown and the high inflation hovering over 9 per cent for the past 23 months.
The government is borrowing from the International Monetary Fund under a 4.7 billion loan programme to check depletion of forex reserves to $18 billion from $48 billion in August 2021.聽
IMF has already disbursed $1.1 billion while another $1.15 billion is expected to be released in the next month.
Economists have already asked the government to be selective on foreign loans to avoid the possibility of debt distress in future.
The government should not be complacent on foreign loan repayment, said distinguished fellow Mustafizur Rahman of Centre for Policy Dialogue.
The ERD updates showed that the government managed to release $6.2 billion from the foreign sources against the commitment of 7.6 billion.聽
ERD has projected that Tk 57,800 crore would be needed to clear the foreign loan repayment in FY25 from around Tk 37,775 crore in the outgoing FY24.
