Planning Adviser Dr Wahiduddin Mahmud on Sunday said that Bangladesh must avoid falling into a 'debt trap' as it approaches graduation from the Least Developed Country (LDC) category.
"We don't want to take loans for large projects unnecessarily. Institutions like the World Bank often come with many project proposals. If some of those are genuinely high priority, we may consider them. But, from now on, these issues are being discussed in details and assessed very carefully," he said.
Speaking to reporters after the day's Executive Committee of the National Economic Council (ECNEC) meeting, he said the government no longer wants to accept loan-funded projects unless they are of critical national priority and cannot be financed or implemented with domestic resources or expertise.
He also said that the government is apparently shifting away from undertaking large-scale development projects financed primarily through foreign loans.
Dr Mahmud noted that certain projects may appear essential at first glance - such as initiatives aimed at monitoring pollution levels-but these do not always justify large, loan-dependent projects involving expensive equipment and foreign consultants.
"Measuring pollution is not that difficult. The instruments involved are not extraordinarily complex. There is no need to take large foreign loans and bring in foreign consultants for such purposes," he said.
He pointed out that as Bangladesh prepares to graduate from LDC status, interest rates on foreign borrowings are increasing, making loans more expensive. "That is why we want to rely on our own capacity as much as possible," he added.
The planning adviser observed that multilateral lenders such as the World Bank and the Asian Development Bank (ADB) are often eager to finance projects and present them attractively with appealing names and well-structured designs.
However, he said the government would no longer accept such projects without rigorous scrutiny.
"We will take only those loan projects that are truly necessary-those that can't be financed domestically or where foreign technological support is genuinely required. Everything else should be done with our own resources, even if on a smaller scale," he said.
Dr Mahmud said this approach reflects a clear policy stance that the current government intends to leave as a guideline for future administrations.
"From a policy perspective, we believe that when taking foreign loans from development partners, projects must be carefully vetted. Only those that are beyond our financial or technological capacity should be considered," he said.
He cautioned that excessive reliance on borrowing offers little long-term benefit.
"There is no point in becoming trapped in a vicious cycle of debt," he remarked.
According to him, foreign borrowing should be limited mainly to large infrastructure projects where substantial loans can help attract domestic and foreign investment. "If such investments lead to export-oriented industries and generate foreign exchange earnings, then debt servicing will not be a problem," he said.
However, Dr Mahmud expressed concern that Bangladesh has for many years depended heavily on loans even in social sectors, including education.
"We want to move away from this long-standing dependence on loans across all sectors, especially in social sectors," he said.
The planning adviser also said the government has decided to issue strict instructions to all ministries, making project completion deadlines mandatory.
"Projects for which ministries have committed to completion by June or December this year must be completed within those deadlines. Otherwise, funding for those projects will be stopped," he said.
A formal directive conveying this decision would be sent to all ministries to enforce accountability and improve discipline in project implementation, Dr Mahmud added.
