Spending on infrastructure falls on increased debt  

The country’s public spending in physical and socio-economic infrastructure has come down substantially on jump in per capita debt, share of debt in GDP and debt service payment as well.

These are also escalating intergenerational debt burden in the future. The domestic debt might reach Tk. 260,498.44 crore and Tk 318,953.08 crore in FY15 and FY16 respectively, which was Tk 202,044 crore in FY14.

The Unnayan-Onneshan(UO), an independent multidisciplinary think-tank, in its October issue of Bangladesh Economic Update 2014, revealed this. The research organisation notes that in FY 2013-14, the per capita external debt burden increased by 2.41 percent and per capita domestic debt burden soar by 10.71 percent compared to the previous FY 2012-13. During the period from FY 2011-12 to FY 2012-13, the debt service payment increased by 12.58 percent.

The outstanding domestic debt as percentage of GDP was 17.46 percent, whereas the outstanding external debt was 18 percent in FY 2012-13, finds the think tank. Government borrowed more from non-banking system than the banking system in FY 2013-14, the UO said.

From FY 2008-09 to FY 2013-14, the per capita domestic debt has increased by 42.38 percent at an annual rate of 14.71 percent, whereas the per capita external debt burden has increased by 11.46 percent at an annual rate of 0.86 percent during the same period of time, the UO said.

The annual rate of increase in per capita domestic debt was 12.24 percent during the period from FY 2001-02 to FY 2006-07 and 17.51percent during the period from FY 2007-08 to FY 2008-09. The per capita external debt, however, increased annually at 4.48 percent during the period from FY 2001-02 to FY 2006-07 and at 2.41 percent during the period from FY 2006-07 to FY 2008-09.

The domestic debt stood at Tk 202,044 crore in FY 2013-14, which was Tk. 181,184 crore, Tk 160,423 crore and Tk 139,220 crore in FY 2012-13, FY 2011-12 and FY 2010-11 respectively. Debt has increased by Tk. 41,621 crore during the period from FY 2012-13 to FY 2013-14. If the trend continues, the domestic debt might reach Tk. 260,498.44 crore and Tk 318,953.08 crore in FY 2014-15 and FY 2015-16 respectively. The external debt has increased by USD 296 million in FY 2013-14 compared to FY 2012-13, whereas the debt increased by USD 9.7 million in 2012-13 compared to the previous fiscal year. The total external debt stood at USD 23250 million in 2013-14, whereas it was USD 22085.5 million, USD 22095.2 million and USD 22981.4 million in FY 2010-11, FY 2011-12 and FY 2012-13 respectively.

The per capita external debt was USD 115.52 in FY 2001-02, which stood at USD 136.45 in FY 2006- 07, USD 147.5 in FY 2010-11 and USD 149.72 in FY 2013-14. Taking the growth path of increase in per capita external debt into account, the UO projects that the per capita external debt might reach USD 153 and USD 158 in FY 2014-15 and FY 2015-16 respectively. The per capita domestic debt was Tk. 3433.36 in FY 2001-02, which reached Tk. 5533 in FY 2006-07, Tk. 9292.95 in FY 2010-11 and Tk. 12968 in FY 2013-14. Taking the growth path of increase in per capita domestic debt into account, the UO projects that the per capita domestic debt would stand at Tk. 15969.42 and Tk. 18970.69 in FY 2014-15 and FY 2015-16 respectively.

The think tank further observes that the foreign debt-service payment is increasing over the years, which indicates a decrease in the net foreign asset of the country. In 2012-13, the total service payment was 1091 million among which 895 million was paid as principal and196 million was paid as interest. The payment, however, reached 787.88 million where principal payment was USD 640 million and USD 147 million until February 2014.

Courtesy: The Daily Sun


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