The government spent 335.72 crore US dollars in the last financial year 2023-24 on interest and principal repayment of foreign loans. Of this, 201 crore dollars was spent on principal repayment of the loan and 134.73 crore dollars on interest payments, according to the government's Economic Relations Division (ERD).
In the last financial year, various donor countries and organizations have given loans of Tk. 926.68 crore to Bangladesh. According to a report of ERD published on Sunday (July 28), more than 36 percent of the money received from the loan was spent on foreign debt repayment.
In FY 2022-23, foreign debt servicing expenditure was 267 crore dollars. The report revealed that the cost of debt servicing has increased by almost 26 percent as interest expenses have increased by 44 percent in one year.
PRI Executive Director Economist Ahsan H. Mansoor thinks that due to the increase in the trend of taking large-scale foreign loans under hard conditions, the cost of debt repayment is also increasing.
He said that the access to loans at flexible interest rates has decreased since Bangladesh became a lower middle income country and will decrease further due to its transition from the list of Least Developed Countries (LDCs).
"Development partners are now interested in lending at floating interest rates instead of fixed rates. Due to the increase in the interest rate in the world market, the interest cost of such loans is increasing," added the economist.
According to the report, development partners disbursed 986.20 crore dollars for Bangladesh in the last financial year, including 926.68 crore dollars in loans and 59.52 crore dollars in grants. Discounts increased by 7.02 percent in one year from 921.48 crore dollars in the previous fiscal.
However, during this period, excluding payment expenses, the donors gave a total of 590.96 crore dollars dollars, which was 603.40 crore dollars in the previous year. As a result, the net write off of debt has decreased by 2.06 percent in one year.
The report also showed that the government spent 36.23 percent of its foreign debt on debt repayment in the last financial year. In FY 2022-23, 30.68 percent of the newly raised loans were spent on interest payments. Commitments increased by 21.88 percent.
Development partners pledged 1,072.34 crore dollars as new assistance last fiscal year. Out of this, 990.61 crore dollars will come from loans and 81.73 crore dollars from grants. The government received 879.86 crore dollars in new aid commitments in the 2022-23 fiscal year, an increase of nearly 22 percent over the year.