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Borrowing From Domestic Sources

Govt to pay Tk 2.26t interest against loans in 3 years

Published : Sunday, 20 September, 2020 at 12:00 AM  Count : 137
Business Correspondent

The government will pay an estimated amount of Tk 225,670 crore (2.26 trillion approximately) in interest on loans taken from domestic resources in the next three fiscal years including 2020-21.
It will include Tk 63,800 crore to be paid this fiscal, Tk 74,890 crore in 2021-22, and Tk 86,980 crore in 2022-23.
An official document showed that the government has allocated Tk 58,250 crore for paying in interest for the running fiscal on loan taken from domestic resources. The amount is Tk 68,080 crore for the next fiscal and Tk78,890 crore for 2022-23.
Interest payment on external sources will include Tk5,530 crore in the 2020-21 fiscal, Tk6,810 crore in 2021-22, and Tk8,090 crore in 2022-23.
From fiscal year 2014-15 to 2019-20 over five years interest on loan were paid Tk30,970 crore, Tk33,110 crore, Tk35,380 crore, Tk41,770 crore, Tk49,460 crore and Tk57,660 crore respectively.
Of the amount, Tk29,440 crore, Tk31,470 crore, Tk33,540 crore, Tk38,160 crore, Tk46,010 crore and Tk52,800 crore were paid for domestic loans over the years while Tk1,540 crore, Tk1,650 crore, Tk1,840 crore, Tk3,610 crore, Tk3,450 crore and Tk4,870 crore were paid in interest on foreign loans.
As per document, Bangladesh is historically getting external financing with lower expenses mainly due to concessional loans. The outer financing average interest rate for the 2014-15 fiscal to 2018-19 fiscal was 1 percent while the expenditure for interest repayment was 0.8 percent of the budget.
But due to sliding down of grants and sliding up of loans, expenditure in interest repayment has slightly increased against external loans. The interest rates for loans taken from external sources was 0.7 percent, 0.8 percent, 0.9 percent, 1.4 percent, 1.2 percent and 1.4 percent for 2014-15 to 2019-20 fiscal  respectively.
As per the document, interest rates for the same kind of loans will be 1.4 percent, 1.4 percent and 1.5 percent for 2020-21, 2021-22 and 2022-23 fiscal years. It mentioned that the interest payment for loans taken from internal sources was lower at 2.3 percent from 2014-15 to 2018-19 respectively due to some government reforms.
It stated that the internal sources remain as the main source of deficit financing for the government.

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