The government has repaid a record US$2.0476 billion in principal and interest on foreign loans in just five months after the BNP government took office. This amount, equivalent to around Tk 25,163 crore in Bangladeshi currency, represents the highest-ever repayment of foreign loans in any five-month period. The repayment was made from March to July this year, reflecting an increase of US$150.4 million, or around Tk 1,849 crore, compared to the same period last year.
According to updated statistics of the Economic Relations Division (ERD), the government repaid US$1.3524 billion in principal and US$695.2 million in interest during this period. This means the government had to repay an average of around US$410 million in foreign loans every month. The BNP government, led by Prime Minister Tarique Rahman, took office on February 17 after winning the 13th parliamentary election on February 12.
One of the major challenges facing the government from the outset was the repayment of growing installments of foreign loans taken in previous periods. However, despite economic pressure and various challenges, the government has maintained continuity in regular foreign debt repayment. Prime Minister's Adviser on Finance and Planning Prof Dr Rashed Al Mahmud Titumir told BSS that the Awami League government borrowed extensively from 2009 to 2024 in the name of infrastructure and mega projects.
However, while taking these loans, due consideration was not given to the projects' "value for money" or the expected benefits against the amount of money spent, nor were the interest rates on the loans properly considered, he added. He said a huge financial liability and subsidy burden had also been created in the power sector for various reasons, including capacity charges. Now, the present government has to manage these liabilities left behind by the previous government, he added.
Titumir said the previous government had taken loans indiscriminately and left the burden of debt on future generations. He said the present government has adopted a highly cautious position regarding taking any kind of loan, whether domestic or foreign. "We are giving importance to using loans to increase dynamism in investment, particularly in the manufacturing sector. If we take a loan, we are making decisions after considering what return will come against it and how much employment will be created," he said.
Under the present government's debt policy, emphasis is being placed not only on raising funds through borrowing but also on where the borrowed money will be spent and how much economic benefit can be generated from the investment. According to ERD data, the pressure of foreign debt repayment has increased steadily in recent years. Foreign debt repayment stood at US$2.67 billion in FY2022-23. It increased to US$3.37 billion in FY2023-24 and reached US$4.09 billion in FY2024-25.
In FY2025-26, the amount increased further to US$4.49 billion, which was around 10 percent higher than the previous fiscal year. The statistics show that the current pressure of foreign debt repayment is not mainly due to loans newly taken in recent times. Rather, the government's liabilities have increased as installments of large project loans taken in previous years have now become repayable. The grace periods of many large infrastructure and mega projects undertaken during the previous one-and-a-half decades have expired.
