Foreign loan repayment surges by 52%, disbursement plummets 17.47% in July-October

The country’s foreign loan disbursement has declined significantly from $1.97 billion to $1.6 billion, during the July-October period of the current fiscal year.

The 17.47% dip is attributed to the government agencies’ limited spending capacity and disruptions caused by election-centered violence and blockades, impeding the smooth execution of development projects.

In contrast, the country faces a 52% increase in foreign debt repayment during the same period, according to the Economic Relations Division (ERD).

ERD officials highlight that the initiation of principal repayment for substantial loans, such as the Bangabandhu Sheikh Mujibur Rahman Tunnel, after the expiration of their grace periods, contributes significantly to this surge.

Adding to the economic complexity, the government’s market-based loans have risen, accompanied by a spike in floating interest rates. Two years ago, the Secured Overnight Financing Rate (SOFR) interest rate on market-based loans was below 1%, but it has now surged by 5%. This surge has escalated pressure on foreign debt repayment, leading to a 176% increase in interest payments during the first quarter of the current fiscal year compared to the same period in the previous year.

ERD data further reveals a remarkable 776.85% increase in foreign loan commitments during the July-October period, soaring to $3.6 billion from $413.81 million in the corresponding period of the previous fiscal year. 

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