As soon as Sheikh Hasina left, the new government of Bangladesh made such a request to China, also sought help from Russia

As soon as Sheikh Hasina left, Bangladesh has expressed its helplessness to China regarding the increasing debt. The interim government led by Nobel laureate Prof. Mohammad Yunus has requested China to reduce the interest rate on the loan given to Bangladesh to 1% and extend the period of its loan liability to 30 years. Bangladesh has sent a letter to China regarding this.

The Economic Relation Division (ERD) secretary of Bangladesh’s Finance Ministry confirmed this to the newspaper ‘The Daily Star’ and said that Bangladesh had written a letter to China earlier this week. The current interest rates on Chinese loans to Bangladesh are between 2-3% and Bangladesh has to repay them in the next 20 years.

ERD officials said that if they are unable to reduce the interest rates on the current Chinese loan to Bangladesh, they will try to reduce the interest on the new loan. They also said that they will request China to extend the tenure of the new loan.

What did Mohammad Yunus say about the increasing debt?

In his address to the nation on Wednesday, interim government’s chief adviser Professor Mohammad Yunus said that Bangladesh is trying to reduce the pressure on its rapidly depleting foreign exchange reserves. In this effort, it is demanding lower interest rates on foreign loans and an extension in their payment time.

Professor Yunus said Bangladesh has requested China to reduce interest rates on its loans and extend the liability period.

Chinese President Xi Jinping, during his visit to Bangladesh in October 2016, promised to provide $20 billion over the next four years to advance 27 projects. This amount is the largest amount given to Bangladesh by any partner country.

After China promised such a huge loan, agreements were signed between Bangladesh and China on several projects. According to ERD data, till this January, Bangladesh and China were able to sign agreements on only nine projects, the total amount of which was $8.08 billion. Out of the $8.08 billion given by China, Bangladesh has been able to use only $4.91 billion.

Now the interim government says that the remaining 18 projects will be reviewed so that their economic priority can be determined in view of the current situation.

Bangladesh is also in talks with Russia for debt relief

Prof Yunus also said that Bangladesh, like China, has requested Russia to reduce interest rates and extend the period of loan liability. He said that the interim government is negotiating with Russia regarding advance payment and outstanding loan for the Ruppur Nuclear Power Plant.

Russia is providing 90 percent of the total cost of the Ruppur Nuclear Plant project, i.e. $11.38 billion, as a loan. Apart from this, Bangladesh has also taken a loan of $500 million from Russia for the project so that the initial work of the project can be done.

Bangladesh is facing challenges in repaying the $500 million loan and its interest due to US sanctions imposed on Russia after the start of the Russia-Ukraine war in 2022. Due to this, this debt of $500 million on Bangladesh has increased to more than $600 million.