Bangladesh's foreign debt repayment surges by 25pc in FY24

Bangladesh has reported foreign debt repayment of approximately $3.36 billion in the recently concluded fiscal year (FY24).

The Economic Relations Division (ERD) released a report on Sunday detailing the updated status of foreign debt repayments for the fiscal year. According to the report, in FY24, the principal repayment stood at $2.01 billion, while approximately $1.35 billion was spent on interest.

The data reveals a significant 25 per cent rise in both principal and interest repayments compared to the previous fiscal year (FY23). In that year, the country had paid a total of $2.68 billion in foreign debt.

The increasing pressure of foreign debt repayment has been a persistent issue for several years, with the most substantial increase occurring over the past two years. This surge in debt servicing comes at a time when the country has been grappling with a prolonged foreign exchange shortage.

Analysts believe that the additional expenditure on foreign debt repayment has put further strain on the foreign exchange reserves and the overall budget.

According to ERD sources, the increase in principal repayments for the past fiscal year was 16 per cent compared to the previous year, amounting to an additional $280 million. In contrast, the expenditure on interest payments surged by 45 per cent, reaching an extra $420 million. In fiscal 2022-23, the interest payments amounted to $930 million.

For the first time, interest payments alone have surpassed $1 billion in the fiscal year under review.