Falling BD Debt/GDP Ratio

[bluesky]

Under "Forces Goal 2030" I am sure this ratio will be Zero!!

When you have no opposition to debate bills, you'll find that things move far more smoothly. Unsurprising.

I think, you are talking about the role of a true Opposition party in the Parliament. You are right that there is only one-sided view in the decision making process without the presence of an effective Parliamentary opposition. However, we have seen how the BNP itself performed in its two terms. There was virtually almost no building of physical infrastructure in those years. Not a one mW of power was added at that time, for example. So, little was added to the national debts in those two terms.

When the present BNP leaders do not know the importance of spending money, even with borrowed money when necessary, to build physical infrastructure, such as roads, railway lines and expressway, I wonder what role they could have played in the Parliament except to call strikes time to time.

 

[That Guy]

I think, you are talking about the role of a true Opposition party in the Parliament. You are right that there is only one-sided view in the decision making process without the presence of an effective Parliamentary opposition. However, we have seen how the BNP itself performed in its two terms. There was virtually almost no building of physical infrastructure in those years. Not a one mW of power was added at that time, for example. So, little was added to the national debts in those two terms.

When the present BNP leaders do not know the importance of spending money, even with borrowed money when necessary, to build physical infrastructure, such as roads, railway lines and expressway, I wonder what role they could have played in the Parliament except to call strikes time to time.

My comment wasn't really a criticism, it was more of an observation.

 

[Vergennes]

BD borrows money at low interest loans to build multi-billion dollar infrastructure projects that it cannot pay upfront for.

25 billion dollars of foreign debt is nothing for a 230+ US billion dollar economy. Current budget is 40 billion US dollars.

Why is budget so low ? $40Bn (~20% of the GDP) for a country like Bangladesh ? @TopCat @bluesky @Anubis

 

[TopCat]

Why is budget so low ? $40Bn (~20% of the GDP) for a country like Bangladesh ? @TopCat @bluesky @Anubis

Because the revenue collection is very low. Most of the people are outside of tax net due to lower income levels (per capita income). Besides BD government is very small and only recently BD government is raising manpower and salary.

 

[Cyberian]

$30 billion in 8 years? Adding an average of $3.75 billion a year?

 

[UKBengali]

$30 billion in 8 years? Adding an average of $3.75 billion a year?

This is just foreign loans.

Add in 2-3 billion US dollars from BD own funding each
year and we are looking at 50 billion over 8 years.

Because the revenue collection is very low. Most of the people are outside of tax net due to lower income levels (per capita income). Besides BD government is very small and only recently BD government is raising manpower and salary.

BD government will start income tax on salaries
over 16,000 Taka soon.

 

[Mage]

BD government will start income tax on salaries
over 16,000 Taka soon.

Sure we can start it. Collecting taxes is the hard part. And I'm not very optimistic about that considering the amoung of corruption in Income tax departments.

 

[Cyberian]

This is just foreign loans.

Add in 2-3 billion US dollars from BD own funding each
year and we are looking at 50 billion over 8 years.

That would be a lot of debt for a tiny economy.

 

[Mage]

That would be a lot of debt for a tiny economy.

Not really. We can afford some debt. GDP debt ratio is not that high in Bangladesh. And in 8 years economy is likely to expand too.

 

[arp2041]

bd should borrow more money unless its expensive to borrow... there is big opportunity of building infra

Building life boats is the need of the hour....

 

[UKBengali]

That would be a lot of debt for a tiny economy.

I am sorry but you have missed the point of this thread entirely.Size of the debt is irrelevant but the ratio to GDP is important.BD is at 23% while Pakistan is at over 60%.

BD can afford to take on a hell of a lot more debt since it can easily
make the repayments and economy is roaring ahead at over 7% a year.
Budget increases by 10% a year in real terms and foreign reserves at 31 billion
US dollars are higher than external debt at 25 billion US dollars.

To give you an idea of what is happening in BD, the government will start the
construction of a near 10 billion US dollar elevated expressway in 2018 connecting
the capital Dhaka with the port city of Chittagong.
China has already offered funding as BD can easily repay this amount of money back.

BD economy is now growing at rates like the former " Tiger" economies of the Far East.

Sure we can start it. Collecting taxes is the hard part. And I'm not very optimistic about that considering the amoung of corruption in Income tax departments.

True but you have to start somewhere.

Even if it raises a billion or two a year, that will help a lot over
the long term.

 

[Mage]

I am sorry but you have missed the point of this thread entirely.Size of the debt is irrelevant but the ratio to GDP is important.BD is at 23% while Pakistan is at over 60%.

BD can afford to take on a hell of a lot more debt since it can easily
make the repayments and economy is roaring ahead at over 7% a year.
Budget increases by 10% a year in real terms and foreign reserves at 31 billion
US dollars are higher than external debt at 25 billion US dollars.

To give you an idea of what is happening in BD, the government will start the
construction of a near 10 billion US dollar elevated expressway in 2018 connecting
the capital Dhaka with the port city of Chittagong.
China has already offered funding as BD can easily repay this amount of money back.

BD economy is now growing at rates like the former " Tiger" economies of the Far East.



True but you have to start somewhere.

Even if it raises a billion or two a year, that will help a lot over
the long term.

If income taxes are collected properly it will raise much more. But income tax department is probably even more corrupt than the police dept.

 

[Shotgunner51]

As we can see over the last 10 years the debt of BD government has fallen from 40.2 to 27.3 % of GDP.

This shows the very conservative economic policies followed by BD governments of all types from BNP/caretaker and now Awami League.

As has already been mentioned by BD Finance Minister, is it time to stop the decline of the debt/GDP ratio by increasing spending on things like education and infrastructure as an investment for the future of the country?

Yes I agree with your view. Existing public debt burden is very modest, BD government has room to run a deficit budget (around -4.7% of GDP now), spend more on education and health, these are of paramount and strategic importance (meaning long term return).

https://www.moodys.com/research/Moo...able-and-strong-growth-performance--PR_347959​

I won't suggest increase tax rates too much, BD should encourage private sector investment, encourage economic growth. Let's not raise tax rate, expand tax net.

On infrastructure, yes BD government can, while at the same time it's also better to spin off and let the private sector (SOE, FOE, POE, everyone else not living on tax) takes care of some infra commercially, govt act as strategic planner, and of course as regulator. Don't forget BD has quite high Savings Rate (28.4% of GDP), that can support a bigger domestic debt market (measured as Domestic Credit to Private Sector, now only at 44% of GDP, far below world average). And of course, invite FDI as always, get those FDI investors to bring their capital & tech.

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2260rank.html
http://data.worldbank.org/indicator/FS.AST.PRVT.GD.ZS​

 

[UKBengali]

Yes I agree with your view. Existing public debt burden is very modest, BD government has room to run a deficit budget (around -4.7% of GDP now), spend more on education and health, these are of paramount and strategic importance (meaning long term return).

https://www.moodys.com/research/Moo...able-and-strong-growth-performance--PR_347959​

I won't suggest increase tax rates too much, BD should encourage private sector investment, encourage economic growth. Let's not raise tax rate, expand tax net.

On infrastructure, yes BD government can, while at the same time it's also better to spin off and let the private sector (SOE, FOE, POE, everyone else not living on tax) takes care of some infra commercially, govt act as strategic planner, and of course as regulator. Don't forget BD has quite high Savings Rate (28.4% of GDP), that can support a bigger domestic debt market (measured as Domestic Credit to Private Sector, now only at 44% of GDP, far below world average). And of course, invite FDI as always, get those FDI investors to bring their capital & tech.

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2260rank.html
http://data.worldbank.org/indicator/FS.AST.PRVT.GD.ZS​

BD's critical need is greater spending on education, health and to a lesser need infrastructure.

All that you have mentioned are sensible ways to raise the revenue to achieve this.

 

[extra terrestrial]

As we can see over the last 10 years the debt of BD government has fallen from 40.2 to 27.3 % of GDP.

This shows the very conservative economic policies followed by BD governments of all types from BNP/caretaker and now Awami League.

As has already been mentioned by BD Finance Minister, is it time to stop the decline of the debt/GDP ratio by increasing spending on things like education and infrastructure as an investment for the future of the country?

We also need to ensure the debt is made productive... There are huge unused loans sitting idle due to various reasons...