Bangladesh’s per capita foreign debt increases to Tk 150,000, says CPD

Bangladesh's foreign debt and repayment obligations are increasing, the think tank says

In the span of three years, the per capita foreign debt of Bangladeshis has increased from Tk 100,000 to Tk 150,000, according to the private research organisation Centre for Policy Dialogue or CPD.

Bangladesh's foreign debt and repayment obligations are increasing, the think tank revealed in a discussion – ‘Bangladesh's External Public Borrowings and Debt Servicing Capacity: Are There Reasons for Concern?’ – organised jointly by CPD and Asia Foundation.

Debapriya Bhattacharya, CPD distinguished fellow, said 70 percent of the development projects have been taken to build infrastructures, leading to a “collapse” of the sector-based development system.

A single group benefited from the project, he said, "In the last decade and a half, the government has done many mega projects with loans. It has not worked for the development of everyone. Rather, maternal and child mortality has increased. Food insecurity has increased. Despite the increase in loans, the investment environment has not improved."

He also fears that organisations or individuals associated with mega projects may be involved in money laundering abroad.

Mostafizur Rahman, another distinguished fellow, said: “Actually, we are re-borrowing to repay a large part of our government and publicly guaranteed debt obligations.”

“There’s no alternative but to speed up domestic resource collection.'

Mostafizur Rahman said that the rate of foreign debt and debt repayment obligation has increased in recent years.

At the end of June 2023, the public and private foreign debt of Bangladesh was $98.9 billion, which exceeded $100 billion last September, according to him.

Although the foreign debt to GDP ratio of 21.6 percent is “relatively not so high”, he said, "The ability to repay the debt is very important."

The formation of the loan portfolio is also changing rapidly while credit conditions are also becoming tighter, especially when compared to GDP, revenue, exports, remittances and foreign exchange reserves, he observed.

“The rapid increase in foreign debt and debt repayment liabilities may become a worrying factor in the economy.”

Mostafizur noted that Bangladesh's GDP to revenue ratio is one of the lowest in the world.

'With this, debt carrying capacity and debt repayment capacity have created concerns. At the end of the day, domestic resource accumulation is important, which has to be considered for repayment of both domestic and foreign debts.”