Foreign debt servicing likely to soar by 45pc
The government's foreign debt servicing burden may rise by as much as 45 percent in the next fiscal year due to the devaluation of taka and higher utilisation of foreign loans in recent years.
About Tk 24,700 crore would be set aside in fiscal 2023-24's budget for foreign loan repayment, according to finance ministry officials.
It is about $2.42 billion considering the current exchange rate of Tk 102 for a dollar.
In the outgoing fiscal year, Tk 17,000 crore was initially allocated for this overhead, which was later revised upwards to Tk 18,150 crore. The revised allocation is about $1.78 billion considering the current exchange rate.
The higher allocation is due to the slide in the value of taka in recent times, said a finance ministry official.
Taka has depreciated by about 23 percent against the dollar in the past year.
Besides, Bangladesh's use of foreign funding has increased in recent years, hitting a peak of $10 billion in fiscal 2021-22.
This fiscal year, the government is projected to utilise foreign assistance of around $12 billion.
Different mega projects including the Dhaka metro rail, Matarbari port and coal-fired power project, are being implemented in full swing and with it, more foreign funds are being used.
The debt servicing cost is increasing as the interest payment for these project's loans is gradually rising, according to an Economic Relations Division (ERD) official.
In the next fiscal year, the government would be using foreign loans and grant of about Tk 127,190 crore, of which about Tk 29,290 crore would be taken as budget support, which is equivalent to $2.87 billion.