Country to take more foreign loans: Minister

The country will have to take a lot of foreign loans until it becomes a developed country, State Minister for Planning Prof Shamsul Alam said on Sunday.

“Our current foreign debt is 13 percent of GDP. There is scope for doubling it. Foreign loans are available at lower interest rates than domestic loans,” he said.

He said this while addressing a seminar organized by the Economic Relations Division (ERD) held in the National Economic Council (NEC) conference room in the capital.

“We should be aware while taking foreign loan as we must see how much benefit is there after taking such loan,” he added.

Foreign loans have low interest rate as well as long repayment period. Interest on foreign loans is 0.75 to 1.5 percent. The repayment period of this loan is also very long. Many loans are repaid over 31 years, he said.

If the domestic loan is taken from banks then up to 7.5 percent interest has to be paid.

“Foreign aid is playing a major role in our development. I fully support the idea of taking loan. We need to take a lot of loan until we can become a developed country,” Alam said.

The volume of foreign aid (PA) is increasing as $48 billion commitment from development partners is in the pipeline and the country got record $10 billion foreign aid in the FY22, the State Minister said.

Speaking on the occasion, Planning Minister MA Mannan said the country took foreign loan during the Pakistan period. After independence, loans have been taken for the development of the country as foreign loan are playing a vital role.

There is no alternative to foreign loans. “We discussed it with Prime Minister Sheikh Hasina and she is very careful while approving projects,” he said, adding that the project is taken after feasibility study.

There is no fear of taking foreign loan. Bangladesh is in a good position in terms of foreign debt. Projects are not taken up without feasibility studies. Now the Planning Commission is very strong.

From the financial year 1972-73 to the fiscal year 2021-22, commitment of foreign loans of $169.49 billion dollars has been given to the country. Of them, $111.38 billion dollars has been disbursed, the ERD data presented at the seminar showed.

$48.54 billion is still in the pipeline. Bangladesh is still getting loans at low interest rate. As much as 76.95 percent of the total loan is given at low interest rates,” it also said.