Bangladesh
- Total external debt: $ 23.6 billion (World Bank, 2008)
- Total external debt payments: Bangladesh paid $1 Billion in 2008 to the rich world in debt payments.
- Total external debt/GNI:
28% in 2008 - Population:
160 million (World Bank, 2008) - Average life expectancy:
64 years in 2007 - Literacy rate:
41% in 2006 - Poverty:
36% of people were living on less than $1 per day in 2008. - Human Development Index ranking:
146 out of 182 countries in 2007. - Public spending:
In 2004, Bangladesh spent more on servicing its debt (1.2% of GDP) than on providing public healthcare (1.1% of GDP).
Where did Bangladesh's debt come from?
Poverty in Bangladesh is caused by political instability, corruption, environmental disaster, and the burden of servicing external debt. Bangladesh joined the World Bank in 1972, soon after independence from Pakistan in 1971. Since then, Bangladesh has received over US$ 22 billion in loans, including $9.5 billion from the World Bank. In addition to repayments on its foreign debt, Bangladesh faces rising commitments on its domestic debt owed to private companies in Bangladesh. These further restrict the resources available to the government for poverty reduction.
Debt cancellation status
Bangladesh is classed as a low-income country by the World Bank and is home to the third highest absolute number of poor people in the world, after China and India. Despite the huge amounts it spends servicing debt ($814 million in 2007), the World Bank describes it neither as ‘severely’ nor even ‘moderately’ indebted, but instead classifies Bangladesh as ‘less indebted’. Instead of rewarding Bangladesh for its track record of prompt debt servicing, the World Bank has interpreted this to mean that Bangladesh’s debt must be sustainable. Arbitrary thresholds on indicators like debt/exports made Bangladesh ineligible for the Heavily Indebted Poor Countries initiative or the Multilateral Debt Relief Initiative. Bangladesh will not receive through either of these initiatives the debt relief that it desperately needs to finance public expenditures on school, health, and education.
Despite lack of action by the World Bank, IMF, and the Paris Club, some bilateral debt relief agreements have taken place. In recognition of extreme poverty levels and devastating floods, Canada cancelled Bangladesh’s bilateral debt of $600,000 in 1999. In 2000, the United States agreed to a debt-for-nature swap, forgiving $10 million in debt payments in return for $8.5 million expenditure by Bangladesh to protect mangrove forests and Bengal tigers. The United Kingdom has reached bilateral agreements with Bangladesh to write off their outstanding debts from loans made for development purposes. As a result, Bangladesh’s UK debt, which amounted to $1.3 million in April 1997, was written off by the end of March 2001.
Bangladesh is one of the original 'Jubilee 52' countries highlighted as being in immediate need of total debt cancellation by the global Jubilee 2000 campaign. In 2004 Hilary Benn MP, identified Bangladesh as having 'significant levels of debt' and being 'one of the poorest countries in the world' and that 'due to good debt management it is not eligible for the HIPC initiative.'
Bangladesh is also one of the countries at the frontline of the impact of climate change. Scientists predict that by 2050, 17% of Bangladesh will be submerged under water, crop production will fall to 30% of current levels; and the intensity of cyclones and gloods will have increased. The rich world owes a huge carbon debt to countries like Bangladesh, which suffer most in terms of cyclones, flooding, and other environmental disasters, while at the same time repaying hundreds of millions of dollars of debt each year. Find out more by downloading the article on the right, Debt and Climate Change.
What campaigners say
Dr Debapriya Bhattacharya, Executive Director for Policy Dialogue, said, “Bangladesh has regularly paid its debts, expanded exports and are now being punished for its success”.
Last updated: January 2010