Repayment may swell over $2b in new fiscal
Surge in hard term and suppliers’ credits over the last few years will push up the country’s foreign debt repayment bill over $ 2 billion in the coming fiscal year.
Economic relations division officials said growing dependence on the non-concessional loans amid falling soft loans from the donors would increase the loan repayment by 75 per cent in the new fiscal year over the outgoing fiscal year.
They calculated that the government had to pay $ 1,131 million in the outgoing fiscal year to meet debt obligation against foreign loans worth $ 59.31 billion taken from the country’s bilateral and multilateral donors since independence.
The country has to pay less than 1 per cent interest for soft loan, but the interest rate of non-concessional loan is more than 6 per cent annually.
The ERD officials said the projected amount for debt obligation in the coming fiscal year could have been higher had not the value of the US Dollar lost by more than 4 per cent against the local currency Taka during the last one year.
Experts fear that the debt repayment would increase further in coming years after the present government failed to utilize soft loans committed by the donors for various reasons including corruption, tough conditions and the lack of utilisation capacity of the implementing agencies.
The ERD has lowered the availability of foreign loans by $ 420 million in the outgoing fiscal year because of slow utilisation of project aids.
The initial projection of US$ 3,370 million had been revised to US$ 2,950 million after the ministries and divisions could not improve implementation rate of projects funded by lenders.
Debapriaya Bhattacharya of Centre for Policy Dialogue said the falling aids from the donors were forcing the government to rely on suppliers’ credit and non-concessional loans.
The interest rate and conditions of such loans are stiff, he said.
The present government struck a series of suppliers’ credit deals in the last several years including US$ 1 billion arms purchase from Russia and US$ 450 million loan from the same country for a feasibility study of the proposed nuclear power plant at Rooppur in Pabna, and US$ 800 million loan from India.
It has continued purchase of aircraft from the US on suppliers’ credit and implemented at least half a dozen projects including US$ 306 million Ghorashal power plant on Chinese suppliers’ credit.
Former caretaker government adviser Miza Azizul Islam said the swelling debt repayment bill and the shrinking soft loan would put pressure on the country’s balance of payments.
He suggested that the government should look for more easy term credit to keep the repayment bill at a tolerable level. ‘The country still needs soft loans,’ he said.
Meanwhile in the pipeline, the unutilised loans, committed by multilateral and bilateral donors, swelled to US$ 16.32 billion in the recent years.
-With New Age input
