Published in The Daily Sun on Wednesday 4 December 2019
Govt to borrow $8.5b for timely completion of mega projects
Anisul Islam Noor
Bangladesh is likely to receive $8.5 billion in foreign loans in the current 2019-20 fiscal year to finish the implementation of some mega projects.
Sources at the finance ministry said the government is targeting to finish some big infrastructure projects as per the stipulated timeframe.
“We are unable to utilise our development potentials in various sectors due to poor infrastructure. Improving the infrastructure will help boost the country’s GDP,” said an official of the finance ministry.
The official also said the government is working to close the gap between village and cities to facilitate inclusive growth and equal economic opportunities both in rural and urban areas.
Revoking the criticism of some experts against foreign loans, the official said foreign loans are necessary as revenue income has not been sufficient for Bangladesh to afford the large projects critical for the country’s infrastructure development.
Experts also expressed concern over the timely implementation of the mega projects. China has already reminded Bangladesh to implement the projects within the timeframe to receive further loans. On the contrary, the government again sought $3 billion in loans from China. Bangladesh’s external borrowing was $33.11 billion as of June this year which is 27.90 per cent of the country’s Gross Domestic Product (GDP). External Debt in Bangladesh averaged $21.55 billion from 2001 until 2018. The external borrowing was $28.34 billion in 2017, followed by $26.31 billion in 2016, $23.90 billion in 2015, $24.40 billion in 2014, $22.40 billion in 2013, $22.10 billion in 2012, $22.10 billion in 2011, $20.34 billion in 2010 and $20.86 billion in 2009.
CPD Distinguished Fellow Dr Debapriya Bhattacharya recently commented that Bangladesh’s foreign loans have been increasing in recent times, thanks to the new status of a lower-middle-income country. Bangladesh is listed among the least developed countries (LDCs), which have been facing “an alarming increase” both in domestic and external public debt for the last five years, according to the report of United Nations Conference on Trade and Development (UNCTAD).
Dr Bhattacharya said Bangladesh should now explore low-cost loans and must be careful about high-interest loans as it may create problems in repaying the money. About 37 per cent foreign funding is required for the annual development programme, Dr Bhattacharya said, underlining the need for mobilising domestic resources.
The experts also said the debt would also rise significantly following mobilisation of fund for different mega infrastructure projects. The government should be careful about the proper utilisation of the foreign loans, they suggested. Economist and Chairperson of BRAC Bank Dr Ahsan H Mansur said the Rooppur nuclear power plant has raised public debt significantly.