Wednesday, August 12, 2020 | ePaper

Unnecessary loans: Country may fall in a debt trap

  • Print
IN a span of five years, it is feared that country's external credit will more than double amid high growth of suppliers credits and short-term borrowings to financing the big infrastructural projects. The high growth of such loans taken mostly on 'political consideration' with high interest rates against short maturity period will take the overall stock of external debt to Tk 5,08,940 crore in 2021-22 from Tk 2,34,670 crore in 2016-17. The unpleasant situation has come up in the Finance Ministry's medium-term macroeconomic outlook. Taking loan without justification is an utter negligence to the interest of future generation as well as the economy.
The debt repayment Tk 13,953 crore in the just-concluded fiscal year and Tk 15,725 crore projected for the current FY would increase significantly beyond 2022 with maturity of the growing short-term borrowings in place of the falling long-term loans on easier terms. The Bangladesh Bank's 'Financial Stability Report 2018' released in May highlighted that the short-term external debt was in a rising trend and stood at 4.5 per cent of the gross domestic product in the FY 2017-18 from only 1.3 per cent in 2011-12.
Credit on favourable terms like one per cent interest rate with long maturity period, extended mostly by the World Bank and the Asian Development Bank, was falling with the country's emergence as a middle-income economy. Whereas suppliers' credit and commercial borrowing at high interest rates from sources like India, Russia, China and merchant banks have increased substantially in recent years for financing the costly projects like Rooppur Power Plant, Dhaka Metro Rail, Padma Bridge Rail Line and Karnaphuli Tunnel.
Undoubtedly, implementing projects with short-term borrowing carries a number of risks in the county where delay in project execution is a normal. Observers said the prices of goods purchased with suppliers' credit were said to be several times higher to the market rates. There is a risk for the country's future generation of facing debt crisis if projects fail to deliver expected economic gains. We fear country may be in a debt trap if the current trend continues.


More News For this Category

Improve market management to save farmers

COUNTRY'S farmers are not getting fair prices of their products in markets due to a change of various hands in the supply chain, poor transportation and inadequate storage capacities. But

Mere warning will not do if the corrupt ones remain unabated

MEDIA report said that the government has taken a move to rein in the soaring cost of development projects and the Planning Minister is going to hold a meeting with

Nuclear Weapons In The Era Of 21st Century

The first atomic bomb changed our world in July 1945. It was the ultimate weapon, a product of World War II and a trigger for the Cold War nuclear arms

Elegy For Major (Rtd) Sinha

You care about someone, and that someone passed away - a situation which is harder to face than many other things in life. May be it is a friend, a

Disburse credit to micro-businesses at low interest rate to survive

COTTAGE and micro-industry entrepreneurs are not getting loans from the government's Tk 20,000 crore stimulus package, while banks are disbursing most of the loans to medium industries. As a result,

Readers’ Forum

Soaring Price Of LPG CylinderThe demand for liquefied petroleum gas (LPG) is increasing day by day in various commercial establishments including home cooking and hotels and restaurants. But consumers are

Digital Change Necessity Disclosed Further In Covid-19

Liton Chandro Sarkar :The Covid-19 shock has left everyone flat-footed and is forcing businesses to embrace digital alternatives much faster than before to face the emerging new norms triggered by

Deception Through Name-Dropping & Selfie-Abuse

Faruk Ahmed : In a shocking turn of events, the nexus of the health sector got shaken when the Rapid Action Battalion (RAB) sealed off the head office and two branches

Deaths in road crash don`t bother the ministry of the government

AT LEAST 17 people were killed in four separate road mishaps in Mymensingh, Chuadanga, Narayanganj and Manikganj on Friday. During the Eid rush of travelling home and back, 242 people

Readers’ Forum

The Death Of A Dreamer"The mediocre teacher tells. The good teacher explains. The superior teacher demonstrates. The great teacher inspires." ? William Arthur Ward The power of one's own work