When a fascist or corrupt government takes out foreign loans not for the public good but for corruption and embezzlement, it is referred to as “odious debt.” These loans are incurred to serve the regime’s own interests through mismanagement and looting. According to the theory of odious debt, if a government borrows money for repression, corruption, embezzlement, or to consolidate its power instead of benefiting the people, then it is unjust to burden citizens with the repayment. Although international law does not formally recognize odious debt, there have been global examples where such debts were canceled or renegotiated under this consideration.
In July last year, the Sheikh Hasina government was overthrown following a mass uprising. During the tenure of that ousted fascist regime, several mega projects were launched that, rather than serving public interest, deepened the country’s foreign debt burden. The Karnaphuli Tunnel, Payra deep seaport, Matarbari power project, and the Rooppur nuclear power plant are key examples. After the interim government assumed office, discussions began at high levels regarding the review of loan agreements for large-scale projects, including the Rooppur plant, which was funded by Russian loans. However, there were concerns that this might create tension between Bangladesh and the lending countries or organizations. As a result, the top level of government has since remained largely silent on the matter. There has been no visible progress in discussions with foreign lenders regarding any reassessment of these loans.
The final report by the White Paper Committee on the state of Bangladesh’s economy also raised issues of corruption and misappropriation linked to mega projects. The committee stated that projects such as the Padma Multipurpose Bridge, Karnaphuli Tunnel, Metro Rail, Padma Bridge Rail Link, Dohazari–Cox’s Bazar rail line, Payra deep seaport, and the Matarbari coal-fired power plant had seen cost escalations—some by as much as 900 percent. According to the report, actual spending on these seven mega projects exceeded the initial estimates by over BDT 800 billion. This suggests a large portion of the loans taken for these projects was misappropriated.
Dr. Debapriya Bhattacharya, head of the White Paper Committee and a fellow at the Centre for Policy Dialogue (CPD), told Bonik Barta, “During the last 15 years of rule, looting didn’t only happen in the name of mega projects, it took place in every sector. The current government is now bearing the burden of these looted projects. We need to start with a medium-term assessment. We highlighted this in the White Paper. We must evaluate how many billions of dollars we pay in interest annually, and how much we can afford. The burden isn’t only about paying off the previous government’s loans—the current government has also taken foreign loans to meet its budget needs. These will add to the existing debt. This issue must be resolved through a medium-term evaluation.”
In various countries, foreign loans taken by corrupt or authoritarian regimes have been considered “odious debt,” leading to cancellation or restructuring. In 2008, Ecuadorian President Rafael Correa declared a large portion of the country’s foreign debt to be illegitimate. He canceled around $3 billion in loans and repurchased them at a lower price. Similarly, after the fall of Saddam Hussein’s regime, approximately $120 billion in loans taken during his rule were deemed “illegitimate” by the United States and the Paris Club, which led to about 80 percent of the debt being exempted after 2003. In Cuba, after the revolutionary government under Fidel Castro came to power, it declared all foreign loans taken by the Batista regime as odious. Although Western powers did not accept this, Cuba disregarded the debt with the help of the then-Soviet Union.
In 2016, a scandal broke in Mozambique when about $2 billion in foreign loans, taken in secret, came to light. The international community largely viewed this as an odious debt scandal, and some of the loans were later restructured by lenders. Similar precedents exist in apartheid-era South Africa and under the Duvalier regime in Haiti. At present, debates around such debts are ongoing in countries such as Lebanon, Greece, Zambia, and Sri Lanka. Many consider the massive loans Sri Lanka took from China during Mahinda Rajapaksa’s tenure to be odious. These loans were spent on controversial mega projects like the Hambantota Port and Mattala Airport. These projects never became profitable and instead depleted Sri Lanka’s foreign reserves due to debt repayment. Although local analysts labeled this debt as odious, it has yet to receive international recognition. The Sri Lankan government has not formally declared these loans as odious, but it has signed restructuring agreements with lenders.
An analysis of Bangladesh’s loan data shows that 47 years after independence—by the end of FY 2018–19—the total outstanding debt from domestic and foreign sources stood at over BDT 8.73 trillion. However, in just five years, by FY 2023–24, that figure had surged to over BDT 19.22 trillion. This means the government’s debt increased by BDT 10.49 trillion in five years. In fact, the Sheikh Hasina regime took on more debt in those five years than all previous governments did in the 47 years since independence. Of this, BDT 9.4 trillion was borrowed from domestic sources, while BDT 9.81 trillion came from foreign lenders. When Sheikh Hasina fled the country on August 5 last year following a mass uprising by students and the public, she left behind a debt burden of nearly BDT 20 trillion. According to analysts, reckless spending on unvetted projects under the guise of development—largely driven by embezzlement and corruption—caused the debt to balloon. Many economists believe that a significant portion of this debt can be considered odious.
When asked about the matter, economist Anu Muhammad told Bonik Barta, “During the Awami League’s rule, several projects—including mega projects—were undertaken. The White Paper Committee highlighted the corruption and irregularities in these projects. Through their report, it’s essentially been acknowledged that corruption took place. But the necessary follow-up on these irregularities hasn’t happened. Why should the public bear the burden of projects that caused losses to the state and lacked popular support? Around the world, many regimes have taken out foreign loans for political gain. Due to the lack of viability, these loans are often labeled as odious debt, and there are now processes in place to disengage from such liabilities. Why isn’t our government moving in that direction? We see no interest from the government in thoroughly investigating these corrupt and irregular activities.”
During Sheikh Hasina’s 16-year rule, one of the most criticized “white elephant” projects was the Karnaphuli tunnel. The total cost of the project amounted to BDT 106.89 billion, of which BDT 60.70 billion was funded through a Chinese loan with a 2 percent interest rate, to be repaid over the next 20 years. The only source of revenue to repay the loan and cover operational and maintenance costs is the toll collected from passing vehicles. The tunnel was opened in October 2023. However, the expected traffic projections have turned out to be mere fiction. The toll revenue is not even enough to cover maintenance and operational expenses—let alone loan repayment. The Karnaphuli tunnel is not an isolated case; in many past projects, similar exaggerated forecasts were presented just to make the projects appear viable.
The previous Awami League government had an ambitious plan to establish Payra as one of the country’s key sea entry points. They claimed Payra would be developed into the nation’s logistics hub. To this end, several development projects were undertaken, including a deep-sea port, a coal-fired power plant, and an LNG terminal. However, experts now say Payra is neither a sea nor a river port—at best, it could have been a terminal. With massive investments already sunk into the project, backing out is no longer an option. Planning Adviser Wahiduddin Mahmud has even described the Payra Port project as an “economic boil” for the country.
The Awami League government undertook the most expensive dredging project in the country’s history to increase the depth of the Rabnabad channel of the Payra River through capital and maintenance dredging. The project cost over BDT 65 billion, most of which came from a $500 million loan from the Bangladesh Infrastructure Development Fund (BIDF), which is financed through the country’s foreign currency reserves. By March last year, the channel was dredged to a depth of 10.5 meters. However, even before the dredging phase officially ended, the channel began silting up again. Large ships can no longer pass through. As a result, experts believe the entire $500 million spent from the country’s reserves during a period of dollar crisis has gone to waste.
To address the country’s power shortage, the Awami League government took a massive loan from Russia to implement the Rooppur Nuclear Power Plant project. From the start, environmentalists raised concerns about the risks of building such a plant in a densely populated country. A high-interest loan of $11.38 billion was taken from Russia to implement the project. This led to major criticism during the Awami League’s tenure. There were repeated allegations that a significant portion of the loan was embezzled. At the same time, a nuclear power plant—the Kudankulam Nuclear Power Plant—is being built in Tamil Nadu, India. In early 2022, three researchers from North South University in Bangladesh and Bournemouth University in the UK published a comparative analysis of the construction and production costs of both power plants. The findings were published in the international journal Springer, under the title “Estimating the Economic Cost of Setting Up a Nuclear Power Plant at Rooppur in Bangladesh.”
One of the most controversial megaprojects is the Rampal Thermal Power Plant. Built near the edge of the Sundarbans, the project has faced strong opposition from environmentalists since the beginning. The plant, built at a cost of BDT 160 billion, was financed by India. From the start, questions were raised regarding its construction cost and the high-interest loan. Repeated complaints have also been made about the use of low-quality coal. Although the plant started operating in 2022, it has frequently been shut down due to mechanical failures and coal shortages. Energy sector experts say the power plant has not delivered much financial benefit.
Both power plants were built by the same company. However, the estimated production cost per kilowatt-hour at Bangladesh’s Rooppur Nuclear Power Plant is 9.36 cents, while it is estimated at 5.36 cents for the under-construction third and fourth units of Kudankulam in India. This means electricity generation at Rooppur costs nearly 75 percent more than at Kudankulam. The levelized cost of energy (LCOE), which calculates production cost per unit based on the plant’s lifespan and average output, was used to determine this.
To help address the country’s electricity shortage, the 1,200-megawatt Matarbari Thermal Power Plant has been constructed with Japanese funding. The project includes the Matarbari deep seaport. Altogether, the project’s total cost is BDT 570 billion. Of this, the main power plant alone accounts for BDT 519.84 billion. To implement it, Bangladesh took a loan of BDT 420 billion from Japan’s development agency JICA. So far, no activities have begun at the seaport connected to the project, except for the power plant itself. After the interim government took office, Power Adviser Muhammad Fouzul Kabir Khan visited the project. During his inspection in September last year, he remarked that the Matarbari power plant was a “project of extravagance.” At the time, he said that ordinary people were not benefiting much from it. He also noted that the project had not significantly helped the local population, but rather a syndicate had profited from its implementation.
The Ministry of Planning took the initiative to assess whether the seven megaprojects initiated by the Sheikh Hasina government were necessary and logically undertaken. The Implementation Monitoring and Evaluation Division (IMED) of the Ministry of Planning was tasked with reviewing the costs of the projects. Based on this review, the expenses of several projects have already been reduced.
According to top government officials, there are plans to cut back on the financial costs of the megaprojects and unnecessary projects initiated by the Awami League government. For projects involving large foreign loans, the government also plans to analyze the debt and consult with the lenders.
When asked about the overall situation, Muhammad Fouzul Kabir Khan, Adviser to the Ministry of Power, Energy and Mineral Resources and the Ministry of Road Transport and Bridges, told Bonik Barta, “The government has stepped away from unnecessary projects and those that obstruct public interest. Even the budgets of several projects have been revised. The government has received the white paper committee’s report on megaprojects. An analysis is underway based on the issues highlighted in that report. There are plans to discuss the financial aspects of these projects with lending agencies. However, it’s not possible to suddenly cancel any project, as it could have a negative impact on investment. Besides this, the government is bringing experienced and skilled engineers into the country’s development infrastructure. Their expertise and advice are also being taken into consideration.”
However, Dr. Muinul Islam, economist and former professor at the University of Chittagong, believes that the government has no scope to shut down the debt-driven projects initiated under the Sheikh Hasina administration. He told Bonik Barta, “It’s not that the government has continued certain projects because they like them. They’ve had to keep them going because canceling them would not be cost-effective for the country. There’s no doubt that the loans taken during Sheikh Hasina’s government were subject to looting. If there is proof to support the classification of these loans as odious debt, then the government should initiate negotiations with the lenders.”