Speakers at a discussion on Thursday said that the growing public loan amid low revenue generation was leading the country to the debt trap that increased reliance on new loans for clearing repayment.
They also said that due to lack of transparency as well as accountability in taking foreign loans for mega projects, many without proper feasibility studies, many such projects were facing cost increases because of delay in implementation.
The overall process provide benefits to some vested quarters for capital accumulation, they said while noting that implementation of development projects through the loans did not create much scope for revenue generation, private investment and foreign direct investment.
Centre for Policy Dialogue and the Asia Foundation jointly organised the event titled ‘Bangladesh’s External Borrowings and Debt Servicing Scenario: Are There Reasons to be Concerned?’ in the capital.
Economist Rehman Sobhan, PM’s economic adviser Mashiur Rahman, former Bangladesh Bank governor Salehuddin Ahmed, CPD distinguished fellow Debupriya Bhattacharya and Metropolitan Chamber of Commerce and Industry president Kamran T Rahman were the main discussants at the event.
Among others, chief co-ordinator of Ganosamhati Andolan Zonayed Saki and former foreign secretary Touhid Hossain took part in the discussion with CPD distinguished fellow Mustafiqzur Rahman presenting the keynote of the discussion.
Calling the government external debt-GDP ratio at 21.6 per was not high by comparison, he said that there was no room for complacency.
He noted that the Tax-GDP had grown to 200 per cent in FY 23 from 148 per cent in FY19 that according to him is becoming a critical challenge for the government.
Referring to the Rooppur Nuclear Power Plant, Indian line of credits and The Padma Rail Link Project, Mustafizur Rahman said that interest payment against the loans taken under the projects and loan programmes had already been started although implementation of projects and loan programmes were yet to be completed.
He said that the government was paying annual foreign debts in recent years by incurring new loans.
The discussion was arranged when the growing payment because of the threefold rise in public debt over the last 14 years has already been highlighted in the media amid dollar shortage and a $4.7 billion loan from the International Monetary Fund.
Salehuddin Ahmed said that utilisation of foreign loans was very crucial as there was not benefit of building a hospital without sufficient doctors and patients.
He noted that the country had already been identified as a risky country because of corruption and wastage of funds in development projects.
Supporting the view of the BB governor, CPD distinguished fellow Debapriaya Bhattacharya said that the growing foreign loans on the pretext of development projects helped the vested quarters to accumulate assets and resort to capital flights.
Development projects became the new source for the vested quarters to accumulate assets from loan theft and share market scams, he said, adding that per capita debt both foreign and local grew to Tk 1.5 lakh crore in a gap of only three years from Tk 1 lakh crore.
He lamented that the growing debt payment created obstacles for higher expenditure on health and education, two most important sectors for sustainable development.
Mashiur Rahman said that the country’s productivity needed to be increased to tackle the economic crisis created mainly because of exchange rate depreciation and inflation.
The speakers also questioned about the nature of development taken placed in the past one and a half decades when the life expectancy was falling, no improvement in private investment and growing unemployment.
Salehuddin Ahmed said that the inflow of the FDI was not increasing despite improvement in infrastructure.
Citing foreign businessmen, he said that corruption and bribes discouraged FDI.
Zonayed Saki said that corruption in big budgeted projects was rising due to lack of accountability and transparency.
