Dhaka: Planning Adviser Dr Wahiduddin Mahmud announced that the government will restrict foreign loans to only those projects deemed critically important, as part of efforts to avoid a ‘debt trap’. Dr Mahmud emphasized the necessity of careful assessment before accepting foreign funded development initiatives, speaking to reporters after an ECNEC meeting.

According to United News of Bangladesh, Dr Mahmud stated that the government is reconsidering its approach to large-scale development projects, particularly those financed through foreign loans. He acknowledged that institutions like the World Bank frequently propose numerous project opportunities. However, only projects of genuine high priority will be considered for foreign funding, and each proposal will undergo thorough evaluation.

The adviser clarified that loan-funded projects will only be approved if they are of national importance and cannot be executed with domestic resources or expertise. He pointed out that certain projects, such as pollution monitoring, do not necessitate significant foreign loans or consultants, as the technology and skills are available domestically.

Dr Mahmud further highlighted that the impending graduation of Bangladesh from the Least Developed Countries (LDC) category would lead to higher interest rates on foreign loans, making them costlier. He stressed the importance of building domestic capacity and warned against being lured by attractive but non-essential projects offered by multilateral lenders like the World Bank and the Asian Development Bank (ADB).

The government aims to reduce its longstanding dependence on foreign loans, particularly in social sectors such as education. Dr Mahmud concluded by emphasizing the need to avoid a cycle of debt and to rely more on domestic resources, even if projects need to be scaled down.