CPD's Distinguished Fellow Professor Dr. Mustafizur Rahman said, the rate at which the Gross Domestic Product (GDP) is increasing in Bangladesh, the foreign debt position is increasing at a much higher rate.
He commented that if this situation continues, the ability to repay the foreign debt will decrease as well as the opportunity to get new loans will decrease due to the decrease in credit quality.
CPD (Center for Policy Dialogue) organized a roundtable titled 'Bangladesh's External Public Borrowings and Debt Servicing Capacity and their Reasons for Concern?' at the Westin Hotel in Gulshan, Dhaka, on Thursday (April 4) at 11 am.
In this meeting, the Prime Minister's economic adviser Moshiur Rahman, distinguished fellow of CPD Dr. Debapriya Bhattacharya, economists, experts and private sector entrepreneurs spoke.
CDP Distinguished Fellow Professor Dr. Mustafizur Rahman said, to deal with the dependence on foreign loans and the pressure of debt repayment, emphasis should be placed on domestic resource collection.
In this context, he said, in the last few five-year plans, big targets have been set for collection of taxes and revenue against GDP, but they have not been met. If this situation continues, new loans will have to be taken to repay the interest and principal of foreign loans.
This economist also urged to speed up the implementation of projects to reduce debt pressure.
He said more foreign financial aid is currently in the pipeline. But as the speed of payment is delayed, the tax burden on the people of the country will increase. Besides, the speed of project implementation will decrease further.
He advised to use the opportunity to take more 'concessional' (flexible) loans to make the implementation of the project profitable with foreign loans.
Dr. Mustafizur Rahman said, earlier, ERD was very strict in the case of 'non-concessional' (inflexible) loans. In the case of such loans, communication was done cautiously. This is no longer the case.
He said several sources of flexible loans have emerged, including the Asian Infrastructure Development Bank. All these sources should be used to increase the adoption of flexible loans.
Advising on being stricter in determining projects, lenders and conditions in foreign loans, he said, OCD (Organization for Economic Cooperation and Development) has prepared a term sheet in all these matters. It has been said, which project should go to which donor, which project should take loan under which conditions.
In this regard, he also said that in order to avoid such problems, the International Monetary Fund should be increased at the rate of 0.5 percent every year in addition to the increase in domestic resource accumulation.
However, he also commented that there is no effective initiative to fulfill this goal.