Per capita debt burden of the country increased by Tk 407.65 to Tk 3,389.84 in the last fiscal year from that in the previous fiscal year, local think-tank Unnayan Onneshan said.
In its August issue of Bangladesh Economic Update released on Saturday, the research organisation observed that every citizen of the country was burdened with a debt of Tk 3,389.84 in the FY 2012-2013 while per capita debt burden was Tk 2,982.19 in the FY 2011-2012.
‘The growth rate of per capita debt burden is increasing at a higher rate than that of per capita GDP growth, resulting in increased accumulation of debt,’ UO said.
Per capita debt (external and domestic) burden is increasing over the years, it said adding that per capita debt burden increased by Tk 407.65 and Tk 656.20 in FY 2012-2013 and FY 2011-2012 respectively.
In the FY 2012-13, the rate of growth in per capita gross domestic product and the rate of growth in per capita debt burden stood at 11.6 per cent and 13.7 per cent respectively, while these were 28.2 per cent and 13.8 per cent in the FY 2011-12, it said.
Though the rate of growth in per capita debt burden decreased in the last fiscal year compared with that in the previous fiscal year, the rate is still higher than the rate of growth in per capita GDP, it said.
According to the UO, per capita debt burden of Bangladesh has been rapidly mounting since the FY 2008-09 due mainly to an increase in public borrowing.
In the FY 2012-2013, total debt increased to Tk 52,068 crore from that of Tk 45,210 crore in the previous fiscal year.
‘The ever-rising public debt has been exerting a serious pressure on the macro-economic stability of the country. This debt also puts an upward pressure on the real rate of interest by crowding the private investment out,’ the independent research organisation said.
To reduce the debt burden, the organisation suggested the government harmonising the fiscal and monetary policies, taking an effective debt management policy on a long-term basis, increasing expenditure on social sectors rather than unproductive sectors, reforming tax structure and developing domestic debt market rather than depending on banking sector.
It observed that the growth rate of development and non-development expenditure had been heading towards opposite directions as non-development expenditure was increasing and development expenditure was decreasing.
Both social and physical infrastructure has received lower budgetary allocation in the FY 2013-14. Similarly, budget allocation has been reduced for agriculture and rural development sub-sectors.
The UO noted that expenditure on interest payment was set at Tk 27,743 crore in the FY 2013-14, resulting that interest payment has turned out to be the top-receiving end of the non-development expenditure.
The leading research organisation has also drawn attention to five major problems related to expenditure in energy and power sector.
The UO said that high expenditure on energy and power had been affecting the government’s ability to invest in social and physical infrastructure.
The cost of subsidy in this sector is soaring as well while electricity price is rising despite the increase of subsidy as most of the subsidy is provided for the production of electricity in rental, quick rental and independent power producer plants.
The high spending on energy and power has still failed to lower the gap between the demand for and the production of electricity, it added.
-With New Age input
