Bangladesh economy faces three risks: CPD

Persistent inflation, a snowballing debt burden and slow economic growth are the three challenges to Bangladesh, according to Debapriya Bhattacharya, a distinguished fellow at the Centre for Policy Dialogue (CPD).

The unabated higher inflation is pushing low-income and marginalised people to the wall, Bhattacharya said at a dialogue titled "New Government, National Budget and Citizens' Aspirations" in the capital's Lakeshore Hotel today.

"They are facing intense problems in affording food, health and health services," he said.

The country's reliance on borrowing for debt servicing is increasing, and so is the debt risk, he said. If the private sector debt is taken into account, Bangladesh's debt-to-GDP ratio is 42 percent now.

"The government's loan from the domestic sources is almost double compared to the foreign debt, which is a sign of big problems," said Bhattacharya.

Bangladesh has never fallen behind on debt payment, but "we know that around $5 billion in debt is unpaid in the energy sector", he said.

Similarly, he added that the government's fiscal space for spending is declining due to the slow growth.