Bangladesh’s per-capita foreign debt ballooned to USD460 or Tk 39,000 in the fiscal year 2021, up by over $67 from a year before, according to central bank statistic. It pushed external debt to $78.04 billion, up by 19 percent in a year in 2020-21. This is because the country had to heavily borrow to combat the disruptions to the economy caused by worldwide pandemic while funding several mega projects was highly demanding.
But contrary to the sweeping rise in foreign debt, foreign exchange reserves at Bangladesh Bank was around $48 billion in last June and had dropped since to around $46 billion early this year. We would say a strong reserves at Bangladesh Bank is supportive to huge foreign borrowing. But if the reserves is at half the borrowing figure the country stands at big risk. The government figure shows total external debt includes around $64 billion in long term borrowing while $14 billion in short terms.
The overall borrowing is equivalent to 22 per cent of the country’s GDP and if we roughly corroborate it with the highest permissible budgetary deficit in a year at 5 per cent of total budget, the gap is equally alarming. When per capita loan is so huge, common people are not even aware of it while government leaders, powerful bureaucrats and big contractors are misusing the huge spending on mega projects, vaccine procurement and lavish foreign tours. Foreign borrowing is the easier way to collect development fund from lenders and misuse it without accountability. Fund givers always look for big borrower and support big contractors to mutually benefit.
We would say the rise in external debts was not unusual for financing pandemic related spending but we would equally say we don’t favour big borrowing for mega projects. We need borrowing to set up industries for mass employment; big industries are not big employers. Last year Bangladesh received huge debts from World Bank, the Asian Development Bank and such others for procurement of corona vaccine and economic recovery programmes. These were reasonable but we have seen how government ministers and contractors had abused such funds.
We oppose such debts. We build reserves from export earnings and remittance to make payment for import bills larger than receipts. So the government borrowing spree is not acceptable when the economy will have crippling affect and the future generation will have to repay.
