Bangladesh to plunge into 'newer depth of debt'

As Bangladesh is spending additional money to salvage the economy hit hard by the Covid-19 pandemic, its debt burden is going 'to surge further', both from internal and external sources, in the coming days, according to an analysis.
 
So far, the government has announced a set of Covid-19 recovery packages worth 13.25 billion dollars, which is equivalent to 4.03 per cent of the GDP, aiming to revitalise the country's economic activities and production system.
 
The government has projected that the debt status of the country will be 38.3 per cent of the total GDP in the 2022-23 fiscal year.
 
According to an official document, the amount will be 15,480 billion taka where internal sources will contribute 9597.8 billion taka, which is 62 per cent of the amount, and external sources will contribute 5882.6 billion taka, which is 38 per cent.
 
The country's debt status in 2021-22 fiscal will stand at 13,531.5 billion taka which will be 37.8 per cent of the total GDP. Of the amount, internal sources will contribute 8408.6 billion taka, which is 62.1 per cent of the amount, while external sources will contribute 5122.9 billion taka, which is 37.9 per cent.
 
In the current fiscal, the debt status stands at 11,678.3 billion taka with 36.8 per cent of the GDP. Internal sources are contributing 7355.5 billion taka, which is 63 per cent, and external sources are contributing 4322.8 billion taka, which is 37 per cent.
 
The total amount is 1.2 per cent higher of the GDP from the revised debt status target of 2019-20 fiscal.
 
The revised status of the previous fiscal was 9996.9 billion taka and it was 35.6 per cent of the GDP. Internal sources injected 6235.8 billion taka, which was 62.4 per cent, while external sources gave 3761.1 taka, which was 37.6 per cent.
 
The amount was 8419.1 billion taka in 2018-19 fiscal, which was 33.2 per cent of the GDP. Internal sources contributed 5338.1 billion taka (63.4 per cent) and external sources 3081 billion taka (36.6 per cent).
 
The document mentioned that there is a possibility for significantly lower interest rates of loans worldwide during a mid-term period. It referred to the Covid-19 pandemic and the negative growth around the world for the dismal scenario.
 
"For the total economic recovery, it'll take some more time," the document reads.
 
So, the deficit financing from outer resources would be comparatively cheap.
 
The document also said proper mixing of loans from internal and external resources will play an important role in reducing financing expenditure and lowering the outstanding debt status from its sliding up.
 
Various economic sectors, including export-oriented industries, small, medium and cottage industries, agriculture, fish farming, poultry and livestock have been brought under these incentive packages.
 
Among the packages, 30,000 crore taka has been allocated for providing working capital facility to the affected industries and services sector organisations, 20,000 crore taka stimulus package for supplying working capital to the small, including cottage industries) and medium industrial enterprises. Special fund for the export-oriented industries with 5,000 crore taka and expanding the facilities of Export Development Fund (EDF) introduced by the Bangladesh Bank with 12,750 crore taka.
 
A total of 2,500 crore taka was allocated for Palli Sanchay Bank, Karmasangsthan Bank, Probsahi Kalyan Bank and Palli Karma Sahayak Foundation to help the youth and expatriates who lost their jobs for the pandemic.
 
Another amount of 5,000 crore taka has been allocated for the farmers at only 4 per cent interest to offset the fallout of the Covid-19 in agriculture and the government will waive 1,840 crore taka bank interests of the people affected badly by the nationwide shutdown enforced to contain the coronavirus pandemic.

(Source: UNB)