External debt comes to $23b on public, pvt borrowings

The country's total external debt stood at nearly US$ 23 billion as the public and private sectors had borrowed money to improve the country's weak infrastructure, eliminate poverty and upgrade industrial and service sectors, officials said Saturday

The country's total external debt stood at nearly US$ 23 billion as the public and private sectors had borrowed money to improve the country's weak infrastructure, eliminate poverty and upgrade industrial and service sectors, officials said Saturday.

The ministry of finance (MoF) and the Bangladesh Bank (BB) data showed that total outstanding debt by the government agencies and entities swelled to $21.45 billion and that by the private sector to $1.35 billion until 2009-10 fiscal.

Bangladesh Bank data showed that outstanding loans of the private entrepreneurs and service providing companies had stood at $1.35 billion after servicing their interest and principals until 2009-10 fiscal.

The public sector entities including the government agencies Bangladesh Petroleum Corporation (BPC), Bangladesh Biman, the shipping ministry and the food directorate owe $21.45 billion to multilateral and bilateral donors till 2009-10 fiscal.

Major foreign loans have been sourced by the Economic Relations Division (ERD) for the government ministries and agencies to implement development projects between 1974-75 fiscal and 2009-10 fiscal.

Besides, some public sector entities like Bangladesh Bank, BPC, Bangladesh Biman, the shipping ministry and the food directorate borrowed money from the bilateral and multilateral lenders to execute their projects and goals.

The private sector including some local enterprises, cell phone companies and other service sector companies take credits from the foreign lenders, based on the approval of the Bangladesh Bank.

Bilateral and multilateral donors include World Bank, Asian Development Bank, International Monetary Fund (IMF), Islamic Development Bank, International Finance Corporation and German bank KFW.

Out of $21.45 billion public sector outstanding loans, the medium and long-term (MLT) outstanding debt has risen to $20.34 billion involving different bilateral and multilateral lenders, with $623 million debt to IMF and $490 million to BPC till 2009-10 fiscal.

A joint secretary of the ERD said, "As per our analysis, if the government does not take any loans further, all debts including principal and interests will be repaid by 2051 calendar year." "The foreign debt obligation would be more if Japan's outstanding loans were added to the total outstanding amount," the official said. The Japan government in 2003 wrote off principal and interest on its 36 loans amounting to $1.46 billion for Bangladesh, signed before 1989.

Former finance and planning adviser of the caretaker government Mirza Azizul Islam said, as the total public sector debt service repayments represent only 5.7 per cent of the total export volume, it is highly sustainable for the country. "As Bangladesh's export growth in the near future will not fall below 6.0 per cent, the debt servicing points to a favourable condition of the country," he added.

The ERD joint secretary said: "Though the external debt obligation in the total aid package of Bangladesh has increased over the years, it is still within manageable limit as compared to many other developing countries."

The official, however, said increasing external debt, together with expiry of grace periods and the unfavourable exchange rate movements is triggering increased external debt service liabilities.

ERD showed that external debt service payments on total public sector debt rose from $100.9 million in 1974-75 fiscal to about $1.70 billion in 2009-10.

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