Graduation into the developing country bracket in 2024 is likely to increase foreign assistance flows as it would enhance Bangladesh's creditworthiness, said the Economic Relations Division (ERD) yesterday.
Bangladesh will enjoy various benefits, including an immense enhancement of the country's image before the global community, said Kazi Shafiqul Islam, former secretary to the ERD.
The private sector's contribution to the economy was almost 80 per cent and they would be able to avail market loans at cheaper interest rates for higher credit ratings.
Side by side foreign direct investment will also increase, he said at a workshop styled "Effective Partnership with Media for Sustainable Development" organised by the ERD on its Sher-e-Bangla Nagar premises in Dhaka yesterday. Around 50 reporters of print and electric media took part.
However, Bangladesh will face three problems: a reduction of scholarships, concessional loans and trade benefits.
Disbursement of foreign assistance would increase to around $15-16 billion within the next 10 years.
External debt repayment will reach $2.5 to $3 billion in fiscal 2024-25, when some big foreign loans are scheduled to mature.
Last fiscal year Bangladesh's debt service, meaning principal plus interest, was $1.56 billion, up from $1.40 billion a year earlier.
"Bangladesh will not fall in any problem regarding debt servicing within the next 10 years although the amount of repayments will be double in fiscal 2024-25," said Kazi Shafiqul Islam, former secretary to the ERD.
The country is at a comfortable level as the debt-GDP ratio is still at only 14 per cent and it would reach 20 per cent once the big foreign loans mature within the next 10 years.
The international standard is 40 per cent, so Bangladesh has a huge scope to take more foreign loans, he said.
On rising interest rates, there is no direct connection of it with LDC graduation. Rather, the lenders were increasing the rate for the increase in per capita income.
Besides, the GDP and per capita income of Bangladesh will also increase, so there is no reason to be worried about debt burden, he said.
Addressing the programme, ERD Secretary Monwar Ahmed said the Committee for Development Policy (CDP), a subsidiary of the Economic and Social Council (ECOSOC), would announce eligibility of graduation from LDC status in September 2021.
It will then observe the country for the next three years before coming up with the final graduation declaration, he said.
But Bangladesh requested United Nations to complete the final review for the graduation before March 17 next year, the birthday of Bangabandhu Sheikh Mujibur Rahman, he added.
Regarding reduction of LDC benefits, the ERD secretary said all of the benefits would not instantly be annulled after the graduation for Bangladesh. The country would continue to enjoy at least some of the benefits for the next three years.
According to him, Bangladesh would obviously face some challenges but those should be turned into opportunities.
Meanwhile Bangladesh will adopt an alternative development strategy to face the challenges during the interim period. However, he said, Bangladesh would enjoy some benefits after graduation.
Anwar Hossain, joint secretary to the ERD, gave a presentation on the topic, saying the graduation might increase borrowing costs but it would still be lesser than what was offered by alternative sources.
Abdul Baki and Md Rezaul Bashar Siddique, joint secretaries to the ERD, and Farid Aziz, joint chief of the ERD, also spoke at the programme.
The daily Star
