Foreign debt is again the big hope to meet the budget deficit

The government's dependence on debt is increasing to meet the budget expenditure. Like the current financial year, the government is going to borrow a huge amount for the budget of the next financial year 2024-25. The next budget may be around 8 lakh crore rupees. The loan amount can be as much as 2 lakh 80 thousand crore rupees. One-third of which will come as domestic and foreign loans.

Almost every fiscal year, the government sets the deficit target at a little over 5 percent of gross domestic product (GDP) while preparing the budget. This time this target is being kept below 5 percent. Still, the deficit is increasing, to meet which the government is aiming to take huge loans. Most of the loan money will come from the country's banking system. This information is known from the source of Finance Department of the Ministry of Finance, which is in charge of budget formulation.

To meet the budget deficit, the total loan target for the current financial year was Tk 2 lakh 57 thousand 885 crore. Out of this, the target of net foreign debt was 1 lakh 2 thousand 490 crore and the target of domestic or domestic debt was 1 lakh 55 thousand 395 crore. Sources of foreign loans are various development aid agencies and countries. The major part of domestic debt is bank debt, which was targeted at Tk 1 lakh 32 thousand 395 crore in the current financial year. The rest of the loan was planned to be taken from savings bonds and other sources.

In the next financial year, the target of net foreign debt in the total debt is 1 lakh 15 thousand crore rupees. The remaining 1 lakh 65 thousand crore rupees can be domestic debt. 1 lakh 45 thousand crores of domestic debt is being considered from the banking system. The remaining 20 thousand crore rupees will be taken from the sale of savings bonds and other sources.
Bangladesh Bank has released the status of domestic loans up to February and foreign loans up to December. As of February, the domestic debt position was Tk 8 lakh 43 thousand 799 crore. And the status of foreign debt till December is 7 thousand 979 million 30 million US dollars. If every dollar is calculated as 117 taka, it stands at 9 lakh 32 thousand 408 crore taka.

According to the sources of the finance department, due to the fact that the domestic and foreign debt status is so large, a large amount has to be allocated for interest payment in the next budget. In the next financial year, more than 1 lakh crore rupees should be allocated for the interest on the debt, a large part of which will be spent on paying the interest on the domestic debt.

According to international standards, a debt-to-GDP ratio of 40 percent is considered risk-free. In case of Bangladesh, this rate is currently more than 37 percent. Even though this rate is still risk-free, experts are worried due to poor pace of revenue collection, poor 10-month export growth (growth of 4 percent), poor remittances. The fact that the price of the dollar has not yet stabilized to a satisfactory level has added to their concern.