The government’s expenditure on foreign loan repayments has surged by over 27% within a year, with total external debt standing at $78.18 billion (Tk7,818 crore) at the close of the 2023-24 fiscal year.
In just the first six months of the ongoing 2024-25 fiscal year (July-December), this figure has surpassed $80 billion (Tk8,000 crore), according to the Economic Relations Division (ERD).
During the same period, the government secured commitments for over $2 billion in new foreign loans, while disbursements totalled $3.26 billion (Tk326 crore).
Concurrently, the government repaid nearly $1.98 billion (Tk198.18 crore), of which $1.23 billion (Tk123.42 crore) accounted for principal repayments, while interest payments amounted to approximately $750 million (Tk75 crore).
Surging repayment obligations
According to ERD data, in the 2023-24 fiscal year, the government settled $3.37 billion (Tk337.20 crore) in direct external debt repayments, while state-owned enterprises paid off an additional $2.70 billion (Tk270.60 crore). Among these, $1.26 billion (Tk126 crore) was allocated for fuel imports, $806 million (Tk80.60 crore) for the power sector, and $452 million (Tk45.20 crore) to the International Monetary Fund (IMF).
Further repayments included $100 million (Tk10 crore) for Bangladesh Chemical Industries Corporation (BCIC), $69 million (Tk6.90 crore) for Biman Bangladesh Airlines, and $19 million (Tk1.90 crore) for the Bangladesh Telecommunication Regulatory Commission (BTRC).
ERD officials anticipate that total loan repayments will exceed $1 billion (Tk100 crore) by the end of the current fiscal year, with obligations set to increase in subsequent years.
The cost of servicing foreign loans has risen sharply due to the depreciation of the taka and the growing interest burden.
Additionally, repayments for project-based loans will escalate in the coming years.
Centre for Policy Dialogue (CPD) Distinguished Fellow Mustafizur Rahman cautioned that the rising repayment burden could exert pressure on foreign exchange reserves.
He noted that once the grace periods for major infrastructure projects expire, both principal and interest payments will need to be settled simultaneously, further straining reserves.
Although Bangladesh has received a positive response from China regarding debt restructuring negotiations, he stressed the need for similar discussions with other lenders to ensure manageable repayment conditions.
He also underscored the importance of exercising caution in acquiring new foreign loans and addressing ambiguities in debt servicing projections to facilitate prudent policymaking.
Breakdown of major debt payments
In the 2023-24 fiscal year, Bangladesh repaid a total of $3.37 billion (Tk37,433 crore) in external debt, comprising $2.24 billion (Tk22,449 crore) in principal and $1.49 billion (Tk14,984 crore) in interest.
The Asian Development Bank (ADB) was the largest recipient, with payments amounting to $1.43 billion (Tk14,255 crore), followed by the International Development Association (IDA) of the World Bank Group, which received $931 million (Tk9,316 crore).
Bilateral creditors also received substantial repayments.
The government settled $370 million (Tk3,701 crore) in loans from China, including $237 million (Tk2,373 crore) in principal and $133 million (Tk1,328 crore) in interest.
Japan’s development agency JICA was paid $193 million (Tk1,932 crore), while India received $97.8 million (Tk978 crore), of which $78.7 million (Tk787 crore) was principal and $19.1 million (Tk191 crore) was interest.
Bangladesh has borrowed $12.65 billion (Tk1,265 crore) from Russia’s Exim Bank for the Rooppur Nuclear Power Plant, with principal repayments set to commence in 2027.
However, the government is seeking to defer payments by an additional two years.
Once repayments begin, the country will need to pay approximately $500 million annually (Tk50 crore) in both principal and interest.
In the previous fiscal year, Bangladesh paid Russia $260 million (Tk2,837 crore) in interest alone.
Due to US sanctions on Russian financial institutions, some payments remain unsettled.
Experts warned that the government bears ultimate responsibility for external debts incurred by state-owned enterprises, as it guarantees these loans.
They stressed the necessity of assessing loan sustainability, repayment capacity, and necessity before accepting further foreign debt.
Without a well-defined debt management strategy, industry insiders say the rising repayment burden could lead to significant fiscal strain in the coming years.
