Bangladesh’s spending on debt service payments was also higher than that on social protection
In 2019, Bangladesh spent 14.60 percent of the total government revenue on repayments of debt services, while the country spent only 4.30 percent on the health sector.
Bangladesh's spending on debt service payments was also higher than that on social protection (11.96 percent).
Against the backdrop that the whole world is passing through a dire situation due to the Covid-19 outbreak, leaders of the G20, IMF, UN, World Bank, and Paris Club of sovereign lenders in April this year agreed on giving temporary relief to poor countries from debt repayment during these hard times.
Around 73 countries, including Bangladesh, are listed under the Debt Service Suspension Initiative (DSSI) and 41 countries applied for temporary debt relief.
However, bilateral, private, and some multilateral creditors did not become a part of the DSSI. These 73 countries owe 41 percent of total debt to bilateral creditors and 27 percent to private creditors by 2020.
Many countries have to spend more on servicing debt payments than on health. To shed light on that issue, Oxfam, Christian Aid, and Global Justice published a report named "Passing the buck on debt relief" on July 16.
According to the report, Bangladesh still has to repay 73.1 percent of its total credit instalments for this year as this vast portion was taken from multilateral and private creditors.
Therefore, the temporary suspension of debt repayment under the DSSI would help Bangladesh little.
The report highlighted that the 73 countries must repay total debts of $33.7 billion this year or $2.8 billion per month.
By the grace of the DSSI, 41 out of the 73 poorest countries will be able to save up to $9 billion in 2020.
These 73 countries still owe at least $11.6 billion ($31.8 million a day) to private creditors including commercial banks and investment funds this year, and roughly $13.8 billion ($38 million a day) to multilateral institutions.
Addressing the issue the Oxfam International's Interim Executive Director Chema Vera said, "The global economy has been hit harder by the coronavirus than the already dire predictions we saw in April ― the G20 Finance Ministers have the mandate to avert an impending catastrophe for hundreds of millions of people."
"They must make the DSSI legally binding to cancel all debt payments, including private and multilateral, through the end of 2022 and also include middle-income countries," added Vera.
Debt service scenario in South Asia
In South Asia, Sri Lanka (47.60 percent) has the highest percentage of debt repayment against total government revenue followed by Pakistan (26.50 percent) and the Maldives (15.80 percent).
Bangladesh is the fourth in the region set above Bhutan (12.80 percent), Nepal (2.70 percent), India (2.70 percent), and Afghanistan (1.70 percent).
Surprisingly, Afghanistan has the lowest debt service to revenue ratio (1.7 percent).
However, the Maldives, India, Nepal, and Afghanistan spent a higher percentage of total government revenue in the health sector than debt service repayment.
Mentionable, the budget allocation for the health sector in Bangladesh has been less than 1 percent of the GDP for the past 12 years. The amount is 0.92 percent for this fiscal year.