UNB, Dhaka :
Unnayan Onneshan (), an independent multidisciplinary think-tank, reveals that persistently increasing outstanding debt along with high debt-service payment every year is likely to lower development finance and escalate intergenerational debt burden.
In the March issue of the organisation’s monthly publication – ‘Bangladesh Economic Update’ – it urged for the adoption of a prudent debt management policy harmonizing with the macroeconomic policies which will ensure growth-enhancing fiscal management in the economy, in order to effectively deal with the ‘ominous effects’ of debt and deficit.
It notes that at the end of FY 2016-17, the total outstanding domestic debt increased by 15.12 percent while the total outstanding external debt burden rose by 8.59 percent.
During the period of July-December of FY 2017-18, the total outstanding domestic debt increased by 15.32 percent compared to the corresponding period of FY 2016-17. On the other hand, rate of growth in net foreign aid decreased to 2.10 percent in FY 2016-17 from 17.54 percent in FY 2015-16.
The debt-gross domestic product (GDP) ratio is on the rise since FY 2013-14.
Statistics suggest that the outstanding domestic debt as percentage of GDP was 15.45 percent
in FY 2013-14, 15.5 percent in FY 2014-15, 15.78 percent in FY 2015-16, and 15.81 percent in FY 2016-17.
In the first six months of the current fiscal year (July-December of FY 2017-18), the debt-GDP ratio has increased to 14.65 percent compared to 14.30 percent in the corresponding period of FY 2016-17.
The outstanding domestic debt stood at Tk. 325849.84 crore in July-December period of the current fiscal year compared to Tk. 282555.42 crore in the corresponding period of the previous fiscal year. In addition, the year-end amount of outstanding domestic debt almost tripled during the period from FY 2009-10 (Tk. 116823.84 crore) to FY 2016-17 (Tk. 309681.87 crore), finds the research organization.
The outstanding external debt, which is currently 12 percent of GDP in the country, has exhibited a significant increase in the previous fiscal year. Statistics from the Economic Relations Divisions of the Ministry of Finance demonstrate that year-end outstanding external debt increased to USD 28566 million in FY 2016-17 from USD 26306 million in FY 2015-16.
Interest payment on the external debt has increased of late while the total debt-service payment has experienced a fluctuation. The total debt-service payment stood at USD 967 million in FY 2011-12, which increased to USD 1294 million in FY 2013-14, then declined to USD 1050 million in FY 2015-16, and again increased to USD 1144 million in FY 2016-17. Interest payment, on the other hand, increased from USD 202 million in FY 2015-16 to USD 231 million in FY 2016-17.
In terms of debt sustainability, the UO evinces that the outstanding external debt represents 53.49 percent of the total amount of export earnings and remittance in FY 2015-16, whereas this ratio was 48.68 percent in FY 2014-15. In addition, total external debt-service payment represents 3.1 percent of total export earning and 2.15 percent of the total amount of export earnings and remittance in FY 2015-16.
In financing increased deficit, the target of government borrowing in the budget of FY 2017-18 increases to Tk. 106772 crore, which was Tk. 93,980 crore in the revised budget for FY 2016-17, finds the think tank.
Increasing government borrowing from the domestic sources primarily through the sale of national saving certificate, i.e. Tk. 39169 crore during July-December period of FY 2017-18 which is 16.08 percent higher than that in the corresponding period of the FY 2016-17, reflects sluggish demand for investible funds in the private sector resulting in stagnant investment in the sector, comments the research organisation.
Unnayan Onneshan (), an independent multidisciplinary think-tank, reveals that persistently increasing outstanding debt along with high debt-service payment every year is likely to lower development finance and escalate intergenerational debt burden.
In the March issue of the organisation’s monthly publication – ‘Bangladesh Economic Update’ – it urged for the adoption of a prudent debt management policy harmonizing with the macroeconomic policies which will ensure growth-enhancing fiscal management in the economy, in order to effectively deal with the ‘ominous effects’ of debt and deficit.
It notes that at the end of FY 2016-17, the total outstanding domestic debt increased by 15.12 percent while the total outstanding external debt burden rose by 8.59 percent.
During the period of July-December of FY 2017-18, the total outstanding domestic debt increased by 15.32 percent compared to the corresponding period of FY 2016-17. On the other hand, rate of growth in net foreign aid decreased to 2.10 percent in FY 2016-17 from 17.54 percent in FY 2015-16.
The debt-gross domestic product (GDP) ratio is on the rise since FY 2013-14.
Statistics suggest that the outstanding domestic debt as percentage of GDP was 15.45 percent
in FY 2013-14, 15.5 percent in FY 2014-15, 15.78 percent in FY 2015-16, and 15.81 percent in FY 2016-17.
In the first six months of the current fiscal year (July-December of FY 2017-18), the debt-GDP ratio has increased to 14.65 percent compared to 14.30 percent in the corresponding period of FY 2016-17.
The outstanding domestic debt stood at Tk. 325849.84 crore in July-December period of the current fiscal year compared to Tk. 282555.42 crore in the corresponding period of the previous fiscal year. In addition, the year-end amount of outstanding domestic debt almost tripled during the period from FY 2009-10 (Tk. 116823.84 crore) to FY 2016-17 (Tk. 309681.87 crore), finds the research organization.
The outstanding external debt, which is currently 12 percent of GDP in the country, has exhibited a significant increase in the previous fiscal year. Statistics from the Economic Relations Divisions of the Ministry of Finance demonstrate that year-end outstanding external debt increased to USD 28566 million in FY 2016-17 from USD 26306 million in FY 2015-16.
Interest payment on the external debt has increased of late while the total debt-service payment has experienced a fluctuation. The total debt-service payment stood at USD 967 million in FY 2011-12, which increased to USD 1294 million in FY 2013-14, then declined to USD 1050 million in FY 2015-16, and again increased to USD 1144 million in FY 2016-17. Interest payment, on the other hand, increased from USD 202 million in FY 2015-16 to USD 231 million in FY 2016-17.
In terms of debt sustainability, the UO evinces that the outstanding external debt represents 53.49 percent of the total amount of export earnings and remittance in FY 2015-16, whereas this ratio was 48.68 percent in FY 2014-15. In addition, total external debt-service payment represents 3.1 percent of total export earning and 2.15 percent of the total amount of export earnings and remittance in FY 2015-16.
In financing increased deficit, the target of government borrowing in the budget of FY 2017-18 increases to Tk. 106772 crore, which was Tk. 93,980 crore in the revised budget for FY 2016-17, finds the think tank.
Increasing government borrowing from the domestic sources primarily through the sale of national saving certificate, i.e. Tk. 39169 crore during July-December period of FY 2017-18 which is 16.08 percent higher than that in the corresponding period of the FY 2016-17, reflects sluggish demand for investible funds in the private sector resulting in stagnant investment in the sector, comments the research organisation.
