<div style="text-align: justify; "><span style="font-size: 1rem;"><b>Bangladesh’s total interest payment on loans for the next two fiscal years is set to reach Tk 2,537 billion, as stated in the government’s ‘Medium Term Macroeconomic Policy Statement for 2023-24 to 2025-26’. The breakdown reveals Tk 1,154 billion slated for the 2024-25 fiscal year and Tk 1,383 billion for 2025-26.</b></span><br></div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Domestically, the interest payments are projected to be Tk 1,008 billion in 2024-25 and increase to Tk 1,205 billion in 2025-26. Conversely, payments on external loans are significantly lower, with Tk 146 billion due in 2024-25 and Tk 178 billion in 2025-26.</div><div style="text-align: justify;"><br></div><div style="text-align: justify; ">The government aims to reduce its total expenditure on interest payments by the end of the 2025-26 fiscal year. Historically, in FY 2020-21, 15.4 percent of total expenditures were devoted to interest payments. This figure is forecasted to decrease to 13.5 percent by the end of FY 2025-26.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">In more detail, domestic interest payments are expected to drop from 14.4 percent of total government expenditures in FY 2020-21 to 11.6 percent in FY 2024-25, returning to 11.8 percent in FY 2025-26. In contrast, external interest payments, which comprised 0.9 percent of total expenditures in FY 2020-21, are anticipated to rise, reaching 1.7 percent by FY 2025-26.</div><div style="text-align: justify; "><br></div><div style="text-align: justify;">This increase is attributed partly to the depreciation of the taka against the US dollar and heightened external financing needs. The prevalence of National Savings Certificates in the debt portfolio, a traditionally high-interest option, has also been a factor in elevated interest costs. However, a projected decrease in the share of these instruments is expected to bring down the implicit interest rate of domestic financing.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">The implicit domestic interest rate is anticipated to improve from 10 percent in FY 2020-21 to 9 percent in FY 2024-25 and FY 2025-26. Meanwhile, external borrowings, influenced by global interest rate hikes and local currency depreciation, are likely to increase the external implicit interest rate from one percent in FY 2020-21 to two percent in FY 2025-26. According to UNB reports</div><div style="text-align: justify;"><br></div><div style="text-align: justify; ">bnbd/fas</div>