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How much money Bangladesh would have to pay will ultimately depend on the exchange rate at the time of payment.

In the proposed budget to be placed today, the debt servicing cost is likely to be $5.18 billion or Tk 57,000 crore, a 35 percent increase compared to the revised budget.

The debt servicing cost is increasing, and foreign funds are not being utilised fully. As a result, the net foreign financing has reduced.

The government had set aside $13.17 billion as foreign financing in the budget for this year, but it was later revised to $9.65 billion. Of the amount, $2.92 billion was earmarked as budgetary support in the original budget, and it was revised to $1.35 billion.

The new budget is likely to allocate $12.86 billion as foreign financing and $3 billion of it could be kept as budget support.

A top finance ministry official said the government had, in most years, failed to utilise the allocated foreign funds. The low use is another reason behind the decreasing foreign financing, according to the officials.

As of April, at least $46 billion in unused foreign financing was in the pipeline.

During the National Economic Council meeting last month, Prime Minister Sheikh Hasina asked all ministries and divisions to quickly finish foreign-funded projects.

While foreign fund utilisation is decreasing, the amount of bank borrowing is increasing significantly.

The highest borrowing will be from banks, Tk 1,37,500 crore. In the revised budget, the bank borrowing increased by 17.78 percent to Tk 1,55,935 crore.

Zahid Hussain, a former lead economist at the World Bank’s Dhaka office, said if the government increases bank borrowing, it leaves fewer chances for the private sector to get loans.

“This affects inflation and puts pressure on foreign currency reserves.”