The size of the budget is increasing. Revenue collection is not increasing in comparison. The government’s dependence on debt to meet the deficit is increasing. The tendency to take this loan has been observed more in the last few years. Therefore, the total debt of the government at the end of the last fiscal year 2023-24 has exceeded Tk 18 lakh crore. On Thursday, the Finance Department of the Ministry of Finance published a report on domestic and foreign debt as of last June.
According to the report, the domestic and foreign debt balance at the end of June last year stood at Tk 18 lakh 32 thousand 282 crore. Of this, Tk 10 lakh 20 thousand 205 crore was taken from domestic sources. Tk 8 lakh 12 thousand crore taka was taken from foreign sources.
Only Tk 5 lakh 96 thousand 863 crore taka was taken from the banking system. When the Awami League took charge of the government on January 6, 2009, the domestic and foreign debt balance was Tk 2 lakh 76 thousand 830 crore.
Due to taking huge loans, the pressure of paying principal and interest has increased. Interest rates have also increased a lot in recent times. Two years ago, the interest rate on government treasury bills and bonds was 1 to 6 percent. Currently, the average interest rate is 12 percent. In the current 2024-25 fiscal year, an allocation of Tk 1,13,500 crore has been made for interest payments, of which Tk 93,000 crore is interest on domestic loans.
According to a report by the Finance Department, Tk 42,388 crore was spent on interest payments on loans in the July-September quarter of the current 2024-2025 fiscal year. This is more than half of the operating expenditure. And 44.04 percent of the government’s total expenditure. During this time, the expenditure on the operating or non-development sector was Tk 82,568 crore. The total expenditure including development was Tk 96,257 crore.
If this trend of interest payments continues, Tk 1,69,552 crore will be required to pay interest alone at the end of the current fiscal year. The budget allocates Tk 113,500 crore for this sector. In the 2023-24 fiscal year, the government’s debt interest payment expenditure increased by 24.5 percent compared to the previous fiscal year. As a result, for the first time in the country’s history, debt interest payment exceeded Tk 1 lakh crore and increased to Tk 114,756 crore, which is 28 percent of the government’s total expenditure. That is, the highest expenditure in the operational sector was on interest payment on domestic and foreign loans taken by the government. Those concerned said that due to the previous government’s lack of proper debt management, a large amount of loans were taken from domestic sources. Although economists and experts think it is reasonable to take low-interest foreign loans.