in

Govt to pay Tk 2,256.7bn as loan interest in three fiscals

The government will pay an estimated Tk 2,256.7 billion as interest on loans in the next three fiscals including the current one.

Of the amount, Tk 638 billion will be paid in 2020-21, Tk 748.9 billion in 2021-22 and Tk 869.8 billion in 2022-23.

An official document showed that the government has allocated Tk 582.5 billion for paying the interest for the running fiscal on loan taken from domestic resources. The amount is Tk 680.8 billion for the next fiscal and Tk 788.9 billion for 2022-23.

For interest on loans taken from external sources, the government will pay Tk 55.3 billion in the 2020-21 fiscal, Tk 68.1 billion in 2021-22, and Tk 80.9 billion in 2022-23.

The government in 2014-15, 2015-16, 2016-17, 2017-18, 2018-19 and 2019-20 fiscals paid Tk 309.7 billion, Tk 331.1 billion, Tk 353.8 billion, Tk 417.7 billion, Tk 494.6 billion and Tk 576.6 billion respectively as interest of loans.

Of the amount, Tk 294.4 billion, Tk 314.7 billion, Tk 335.4 billion, Tk 381.6 billion, Tk 460.1 billion and Tk 528 billion were paid for domestic loans for 2014-15, 2015-16, 2016-17, 2017-18, 2018-19 and 2019-20 respectively while Tk 15.4 billion, Tk 16.5 billion, Tk 18.4 billion, Tk 36.1 billion, Tk 34.5 billion and Tk 48.7 billion were paid for foreign loans’ interest of those stipulated fiscals.

According to the document, due to the higher amount of concessional loans, Bangladesh is historically getting external financing with lower expenses. The outer financing average interest rate for the 2014-15 fiscal to 2018-19 fiscal was 1 percent while the expenditure for the interest repayment was 0.8 percent of the budget.

But due to the sliding down of grants and sliding up of loans the expenditure of 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, 2015-16, 2016-17, 2017-18, 2018-19 and 2019-20 fiscals 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 fiscals.

It mentioned that the interest payment for loans taken from internal sources was downed 2.3 percent comparing 2014-15 fiscal and 2018-19 fiscal due to some government reforms.

The interest rates for 2014-15, 2015-16, 2016-17, 2017-18, 2018-19 and 2019-20 fiscal for the loans taken from internal sources was 10.6 percent, 10 percent, 9.3 percent, 9.2 percent, 9.4 percent and 9.1 percent respectively.

As per the document, the interest rates for the same kind of loans will be 8.6 percent, 8.6 percent and 8.8 percent for 2020-21, 2021-22 and 2022-23 fiscals.

It stated that the internal sources remain as the main source of deficit financing for the government.

Although the interest rate against the external sources jumped slightly, the overall cost for interest payment slide down 2.2 percent comparing 2014-15 fiscal and 2018-19 fiscal.

Reference