State of the Bangladesh Economy in FY2023-24 (First Reading)
Independent Review of
RBD
Bangladesh's Development
Debt Servicing: An emergent concern
In the backdrop of Bangladesh's Middle-income graduation,
interest rates on its foreign borrowings are on the rise.
☐ Share of grants and concessional loans in the loan portfolio
has been on the decline.
☐ More stringent terms of borrowings (grace period and
maturity period are coming down; loans with surcharges
and service charges going up).
☐ Principal plus interest payments on long term loans was
USD 5.3 billion in 2021, which rose to USD 6.2 billion in
2022 (16.9% growth). The corresponding figure was only
USD 3.7 billion in 2020.
➤ Some of the foreign borrowings of Bangladesh have been
incurred at flexible LIBOR/SOFR rates (e.g. loans from
Islamic Trade Finance Corporations (ITFC) at SOFR+2%
interest rate to ensure energy security).
➤ Debt servicing liabilities will rise significantly in the near
and medium term future.
Table 5.5: Movement of LIBOR, SOFR,
and EURIBOR rates
Year LIBOR
(in percentage)
SOFR
EURIBOR
12 Months
6 months
2016
1.38
-0.17
2017
1.79
-0.26
2018
2.76
1.98
-0.27
2019
2.37
2.20
-0.30
2020
0.77
0.36
-0.37
2021
0.30
0.04
-0.52
3.40
1.64
0.68
5.47
4.96
3.66
2022
2023
Source: Extracted from Global Rates (2023).
CPD (2023): State of the Bangladesh Economy in FY2023-24 (First Reading)
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