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Bangladesh’s per capita external debt increased by $22.05 to $579.28 (equivalent to Tk 63,048) in last fiscal year from $557.23 in the previous fiscal year.
In FY23, the dollar exchange rate was Tk 108.84.
In last five fiscal years, per capita debt increased by 53 per cent. In FY19, such debt was $378.2 or Tk 31,776, according to the Bangladesh Bank’s latest data.
Total external debt almost doubled in last five fiscal years and such loan reached 21.8 per cent of gross domestic product (GDP) in FY23. However, it was 17.8 per cent of GDP in FY19.
In FY19, foreign debt was $62.63 billion and it increased by 57.97 per cent to $98.94 billion in last FY, the central bank’s latest data showed.
External debt has increased at a time when the country's foreign exchange is under pressure and forex reserves continue to drop. However, short-term external debt declined by 29 per cent to $16.03 billion in FY23 compared to previous FY.
According to the World Bank’s International Debt Report 2022, India’s foreign debt increased by around 83 per cent, Pakistan’s 101 per cent, and Sri Lanka’s 119 per cent in 10 years between 2011 and 2021.
During the same period, Bangladesh’s foreign debt increased by 213.6 per cent, according to the central bank data.
The data also showed that the public sector took $76.67 billion in foreign credit at the end of June 2023, with $64.57 billion borrowed directly by the government and the rest by various government institutions.
Short-term foreign loans in the private sector increased again to $22.25 billion in June from $22.18 billion in March. However, buyers’ credit dropped to $7.68 billion in June from $8.13 billion in March 2023.
Usually, external debt is deemed risky when it exceeds 40 per cent of GDP, economists said.
Ahsan H Mansur, Executive Director of Policy Research Institute of Bangladesh, said the government is facing a shortage of revenue. As a result, the government has to take out loans for the implementation of the country's mega projects, he added.
"Once we had received external debt at low interest. But now we have to get foreign debt in line with many terms and conditions. The country will face problems with remittances and export earnings. So, the central bank and the government should focus on boosting remittances and exports."
The economist also said that after Bangladesh’s graduation from the LDC status, the government will have to take loan at the market-based interest rate, which would not be easy for the country.
A country’s external debt refers to the total amount of money that the country owes foreign creditors such as foreign countries, international organisations and foreign private entities. It includes both public and private debt obligations.
Bangladesh usually receives foreign loans from multilateral institutions such as the World Bank, the International Monetary Fund, the Asian Development Bank, the Islamic Development Bank, and major overseas commercial banks.
