Tk 17,000 per capita external loan

Bangladesh has $204 or over Tk 17,000 debt per person, but there is nothing to be concerned about the amount of per capital external debt, the government says. The Economic Relations Division revealed the data from a report at a workshop for journalists in Dhaka on Thursday.

The total outstanding external debt of the country stood at $33.52 billion or over Tk 2.815 trillion in June last year, according to the report. The weighted average rate of interest on these loans taken from different countries and agencies is 1.23 percent.

Bangladesh has an average time period of 31 years to pay off the loans, with an average grace period of eight years.Considering the current financial capability of Bangladesh, the amount of external debt has in no way crossed the limit to cause alarm, the report says.

The amount is 14.3 percent of the gross domestic product or GDP in 2018. It was 12.8 percent of the GDP in 2017.The rate of external debt becomes a cause for concern when it crosses the level of 40 percent of the GDP, Md Ruhul Amin, a joint secretary at the ERD, said at the workshop.

"We will be able to complete the repayment in 2057. If we don't take any new loans, the maximum repayment we will have to make is around $1.6 billion in 2027. The rate will gradually decrease afterwards.

"So, there should not be any problem in paying back the foreign loans, even if Bangladesh's GDP growth rate drops to 5 percent," he said.In 2017-18 financial year, Bangladesh repaid 1.11 billion external debt while the GDP growth accelerated to 7.86 percent.

"The foreign debts won't pose any risk to our economy because the repayments we have to make are only 3.5 percent of our remittance inflow and 6.9 percent of our revenues," Ruhul Amin said, attempting to reassure the journalists.

Bangladesh's external debt doubled in the past five years, according to the report. A total of $44.3 billion more is also waiting in the pipeline, it says.

As it looks set to get the 'developing nation' status by 2024, the rates of interest on loans offered by other countries and agencies are also increasing.

Interest rate on loans from Japan International Cooperation Agency or JICA may increase from 0.1 percent to around 1 percent while the World Bank's International Development Association has already pushed the rate from below 1 percent to 1.5 percent, according to Ruhul Amin.    

Asian Development Bank lends money at two levels. One is with 2 percent interest while the other is based on London Interbank Offered Rate or LIBOR, he said.

China said Bangladesh would not need to pay more than 2 percent interest while India is not charging more than 1 percent, the ERD joint secretary said.  

Russia, however, is taking more than 4 percent interest for the $12.65 billion Rooppur Nuclear Power Plant Project. "Generally the interest rate is high in such deals," the additional secretary said.

---bdnews24.com