Growing worries on external debt

EDITORIAL

Economic reforms needed

The World Bank (WB) invited two economists, Ahsan H Mansur and Hossain Zillur Rahman who head the Policy Research Institute of Bangladesh, and Power and Participation Research Centre respectively, at the unveiling of the quarterly report titled “Bangladesh Development Update”. The views shared by these economists call for the country's international development partners and the WB to engage with the government on a reform agenda in the aftermath of the general elections due at the end of the year to contain problems brewing on various economic fronts.

The areas of concern are the declining foreign exchange (forex) reserves and low revenue collection. The government has embarked on ambitious infrastructure growth, much of which is going to be financed with foreign credit which is causing problems with the balance of payments. Rising debt is of major concern as it is depleting forex reserves and in the absence of stable foreign remittances, there is cause for worry.

While our forex reserves stand at USD 32.93 billion (as of August), our remittances appear to be stuck in the region of USD 14-15 billion per annum. There is concern whether the government has done the right analysis on cost of projects undertaken by it. The project highlighted was Padma Bridge road link that is estimated to cost the national exchequer Tk 40,000 crore, but given our rate of implementation there is the possibility of this cost going up by as much as 25 to 50 percent.

What all this boils down to is whether the nation is headed towards a debt-trap, as has happened in the case of a few countries in the region. Hence, the call for re-examining the viability for these multi-billion-dollar projects is a just one and should be considered seriously.

• Courtesy: The Daily Star / Oct 04, 2018