DHAKA, Aug 22, 2024 (BSS) - External interest payment increased by 162 percent year-on-year in the first nine months of the last fiscal year 2023-24 (FY24) as debt servicing of loans taken for some mega projects has started.

According to the finance ministry's "Quarterly Debt Bulletin" released on Wednesday, Tk 11,602 crore was paid as interest on foreign loans in the July-March period of FY24.

That number stood at less than half in FY23, amounting to Tk 4,435 crore.

As per the report, this is because the government has started paying interest against some major foreign loans.

Overall, the government's outlay on interest payments for both foreign and domestic loans increased by 18 percent to Tk 71,191 crore in the nine-month period. At the same time, interest payments against domestic borrowing increased by 7 percent to Tk 59,589 crore.

In the first nine months of FY24, interest payments against loans from banking sources increased 21 percent to Tk 25,375 crore.

At the same time, interest payments against non-banking sources, mainly national saving certificates, stood at Tk 34,214 crore, which was Tk 800 crore lower compared to the year prior.

The government set a borrowing target of Tk 257,885 crore from both foreign and domestic sources in FY24. However, it could borrow only Tk 80,101 crore, or 31 percent of the target, in the first nine months. Of the amount, loans from domestic sources amounted to Tk 38,407 crore.

In the July-March period, the government borrowed Tk 53,407 crore from banking sources. But it did not borrow from non-banking sources. Rather, it repaid Tk 15,000 crore that it had borrowed previously.

In the case of non-banking borrowing, sales of saving certificates declined over the past few years.

In July-March of FY24, the government sold saving certificates worth Tk 62,238 crore and repaid Tk 74,783 crore against the loans. As a result, the government's net borrowing in the sector declined by Tk 12,545 crore.

The finance ministry report added that various reform initiatives, such as the online issuance process, rationalised investment limit and introduction of multi-tier interest rates along with inflation-induced pressure on savings, contributed to the reduction of the net sales of the national savings instruments.

At the end of March this year, the government's total outstanding debt stock was Tk 1,697,415 crore, which is 33.78 percent of the GDP.

Of the total figure, domestic debt is Tk 982,743 crore and external debt is Tk 714,672 crore.