Foreign loan repayment gets costlier with weaker taka
Disbursements by development partners fell by 17% in July of FY24 despite increase in repayments
Bangladesh's foreign debt repayment in July of the current fiscal year increased by 41.38% against the same month last fiscal, according to the Economic Relations Division.
The increase jumps to 63.77% (Tk1074.76 crore) when calculated in taka, due to the sharp devaluation of local currency against the US dollar.
According to the ERD data, the government cleared $253.09 million in interest and principal payments for development assistance in the first month of the current fiscal.
In the same month of FY23, the repayment was $179.02 million – an increase by 41.38%.
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A dollar was worth Tk94.70 in July last year, which jumped to Tk109 in July this fiscal.
The government is under pressure to repay loans to development partners, primarily due to interest payments on market-based loans.
In July last fiscal year, the government paid $64.68 million as interest to development partners. This has increased to $106.56 million in the current fiscal.
Meanwhile, disbursements by development partners fell by 17% in the first month of FY24 despite the increase in loan repayments.
In July of the current fiscal, the foreign loan release was $405.79 million, which was $488.04 million in July FY23.
According to the ERD report, the development partners for the current financial year have not yet committed for new loans. However, grant commitments of $5.39 million were received in July.
In the previous fiscal year, the government received a grant commitment of $1.53 million in July.
In the first month of this fiscal, Japan released $251.89 million, the Asian Development Bank released $70.43 million and the World Bank $57.53 million.
