Pressure of foreign debt payment mounts amid the ongoing dollar crisis.
Payment of instalments of huge loans taken bilaterally on hard conditions from Russia, China and other development partners has started.
As a result, the amount of loan repayment is increasing fast and will increase further in the days to come.
The amount foreign loans and interest that the government would pay one decade ago, has doubled now.
According to a recent report of the finance ministry, if the government does not take any fresh loans, Bangladesh will have to pay about double the current amount after seven years.
A number of big projects including Rooppur Nuclear Power Plant, Padma bridge rail link and Matarbari Power Plant are being implemented with the bilateral loans. Many more projects are being implemented on foreign loans.
In most of the cases, the duration of payment of these loans is short. As the payment of these loans has started, additional pressure has been created on the overall debt situation. However, the benefits of big projects implemented on these loans are yet to be manifest.
The railway track from Dohazari, Chattogram to Cox's Bazar has been built at the cost of Tk 180 billion. Of the amount, Tk 130 billion has been taken from China on credit. Only two trains operate on this route.
Rooppur Nuclear Power Plant has not gone into production as yet, but repayment of the loan installments has started. A loan of USD 11.38 billion dollars was taken from Russia to build this 2400 MW power plant. The amount of loan in Bangladeshi currency stands at Tk 1250 billion.
The payment of foreign loans is increasing at a time when the country is facing a dollar crisis for long. The foreign exchange reserve is decreasing as the remittance is not coming to an expected level. The export earnings are also not at the expected level.
Former lead economist of World Bank's Dhaka office, Zahid Hossain, speaking to said, the grace period of different projects including Rooppur Power Plant, Metro Rail, Karnaphuli Tunnel is ending. The time of starting loan payment is nearing. The grace period of some projects has expired. As a result, the pressure of payment of foreign loans is increasing.
Zahid Hossain said the expenditure for the payment of foreign loans has increased due to hike of dollar price, which is creating additional pressure on the budget. However, the revenue is not being collected in that proportion.
If the supply of dollars is not increased, there will be a deficit in the foreign transaction.
Loan payment to be doubled in seven years
The finance ministry has recently made a report over the situation of loan receipt and future loan payment. A picture of receipt of loans and payment in the next few years has been depicted in the report. The report shows the foreign loans stand at USD 70.76 billion dollars. Of this, USD 62 billion dollars have been taken for development projects, which has increased by two and half times in ten years.
According to the finance ministry report, the foreign loan will keep increasing. It will increase to USD 85.24 billion in the next fiscal year. However, the loan will decrease to USD 72.91 dollars in the fiscal year of 2029-30. In this assessment, it has been assumed that fresh loans will not be taken. The loans in the pipeline only would be taken. It is learnt that USD 44 billion dollars are in the pipeline.
Bangladesh has paid USD 2.68 billion in interest and principal amount in the 2022-23 fiscal. According to the finance ministry estimation, USD 3.28 billion dollars have to be paid in the current fiscal year. The amount will exceed USD 4 billion dollars. The payment of loans will keep rising in the following years. The amount will increase to USD 5.15 billion in the fiscal of 2029-30. Later, the payment of the loan will decrease.
When contacted over cell phone regarding the foreign debt situation, Economic Relations Division (ERD) secretary Shariar Quader Siddique said all details in this regard is on their website.
Loan payment in six months increased by 49pc
Loan payment in the six months of current fiscal 2023-24 (July-Dec) has increased by 49 per cent.
ERD sources said USD 1.57 billion in interest and principal amount have been paid to the development partners in the six month of the current fiscal year. The amount was USD 1.05 billion dollars during the corresponding period of last year.
The pressure of payment of foreign loans has increased in the last one and two years. According to ERD, USD 2.68 billion dollars in interest and principal amount were paid in the last fiscal year, which was USD 2.01 in the previous fiscal year.
Loan payment of big project begins
Loan payment of some big projects has started, one of them is Rooppur Nuclear Power Plant. The loan for this power plant was taken in 2016. Its grace period is 10 years. And the loan has to be paid in 10 years. Earlier, USD 500 million dollars were taken for land acquisition from Russia. The installment of which is being given. Loan payment for Rooppur Nuclear Power Plant will begin in 2026.
After the attack on Ukraine, the West dropped Russian banks from the widely popular 'Swift System'. As a result, the installment of the Rooppur Nuclear Power Plant could not be paid. However, the amount of payment is being kept in a special account of Bangladesh Bank. USD 330 million dollars have been kept in the last one and half years, which is shown as loan payment.
The duration of loan payment including grace period for Rooppur is 20 years. However, Bangladesh will get at least 30 years to pay loans taken from JICA to build Metro Rail-6. USD 197.18 billion dollars were taken for the metro rail.
The loan payment of Padma Bridge is a bit different. The finance minister has given Tk 326.05 billion to the bridge authority to build the Padma Bridge. The bridge authority is paying the loan. Contract firm China Major Bridge Engineering has been paid in dollars equivalent to Tk 120 billion. This has created a pressure on the dollar reserves.-Prothom Alo
