Per capita foreign debt up to $572 in FY22

Bangladesh’s per-capita foreign debt rose to $572 in FY22, up by a significant 71.77 per cent compared to $333 posted in FY18, reveal an analysis of the Bangladesh Bank and Bangladesh Bureau of Statistics (BBS) data.

Compared year-on-year, the country’s per capita external debt rose by $90 or 18.67 per cent from $482 recorded in FY21.

To get the per capita figure for a specific FY, The Business Post divided Bangladesh’s external debt position with the country’s total population posted during that particular year.

For example, the country’s external debt position stood at $94.50 billion – which was 22.77 per cent of GDP – in FY22, and the total population was 165.16 million. These figures can be used to calculate this country’s per capita foreign debt for FY22, which stands at $572.

The total external debt position was $81.57 billion in FY21. The figure rose by 15.85 per cent to $12.93 billion in FY22.  Bangladesh’s external debt position stood at $54.74 billion in FY18.

Experts say the per capita foreign debt increased at a time when Bangladesh’s economy is in the grip of a severe USD shortage, with the rising exchange rate increasing the country’s foreign debt service obligations.

Besides, the cost of living has increased due to inflationary pressure. As a result, the per capita debt burden is putting even more pressure on the public.

Ahsan H Mansur, executive director of the Policy Research Institute (PRI), told The Business Post, “Our per capita debt burden is increasing. Both foreign and domestic debts are also going up. This growth poses a serious risk.

“In fact, the good times we had in our economy are no more.”

According to the Bangladesh Bank, in June this year, the official rate of USD was Tk 93.45, so the amount of per capita foreign debt stood at Tk 53,453.4 in FY22- when converted to local currency.

On September 15, the average rate of USD was Tk 105.37. When adjusted for the latest rate, the amount of foreign debt per capita stands at Tk 60,274 in local currency.

“The figures clearly indicate that the increasing exchange rate has pushed up the country’s external debt servicing,” said Ahsan Mansur.

Of the total debt of $94.50 billion in the previous FY, public sector debt amounted to $68.55 billion and private sector debt $25.95 billion. In FY21, public sector external debt was $62.88 billion, and for the private sector it was $18.68 billion.

Almost all of the public sector debt is long-term. In FY22, $56.55 billion was long term debt, while the rest were short term loans.

Ahsan H Mansur believes that the amount of public debt has increased in the last one year due to the implementation of several mega projects, including the implementation of the Rooppur nuclear power plant.

He further said, “Most of the government’s debt is part of budget support. The government is unable to boost revenue, so it is increasingly dependent on foreign loans. As most of the public foreign debt is long term, the pressure to repay is somewhat less.

“However, the private sector debt is growing at an alarming rate.”

At the end of the last FY, the private sector’s total external debt was $25.95 billion, and of this figure $17.75 billion is short-term debt.

Ahsan believes that the rise of private sector loans from foreign sources has helped reduce the pressure of domestic loans on the country’s banks.

“But now that the rate of USD is rising, the pressure on the private sector to repay this debt is also increasing. To cope with this pressure, the prices of products are going up. The consumers are the ultimate sufferers amid this situation.”