Private sector short-term foreign loans declined slightly in March as businesses focused on repaying existing loans rather than taking new ones.
Data from Bangladesh Bank shows that short-term foreign loans decreased from US $ 11.07 billion in February and US $ 11.25 billion in January to US $ 11.04 billion in March.
From US $ 11.79 billion in December 2022 to US $ 13.65 billion in June 2023, this decrease persisted, reaching US $ 16.41 billion in December 2022.
Additionally, the buyer’s credit dropped from US $ 5.77 billion in February to US $ 5.69 billion in March. The decline in short-term foreign loans was ascribed by bankers to companies giving loan repayments priority over fresh borrowing.
They observed that companies were having trouble getting fresh foreign loans, maybe as a result of high loan balances and a decline in trust from overseas lenders.
The current economic situation, including import restrictions and a dollar crisis, along with high dollar prices, also led to reduced business activities.
But the downward trend seems to be abating, as it has been steady at US $ 11 billion for the past three months.
Additionally, debt services decreased from US $ 3.11 billion in December to US $ 1.93 billion in February.
Foreign back-to-back LC fell to US $ 955 million in March from US $ 994 million in February, while deferred payment decreased to US $ 824 million in March from US $ 833 million in February.
Based on figures from the Bangladesh Bank, Bangladesh’s external debt increased from US $ 98 billion in June 2023 to above US $ 100 billion by the end of December 2023.
From US $ 65.27 billion in June 2020 to US $ 100.6 billion in December 2023, the nation’s foreign debt climbed by 52 per cent. The nation’s capacity to manage its debt obligations was questioned in light of the foreign debt’s explosive increase.
The total amount of money a nation owes foreign creditors, including other nations, international organisations, and foreign private companies, is referred to as its external debt.
Experts cautioned that the nation’s finances may be put under stress due to the huge external debt, since a sizable amount of its revenue would need to be used to repay debt.
They highlighted that in order to lessen its reliance on foreign borrowing, Bangladesh must carefully manage its resources and give sustainable economic development first priority.
Ineffective loan distribution to profitable industries may make repayment difficult. The cost of interest on international loans has increased due to the local currency’s depreciation against the US dollar.
In July 2021, the exchange rate per dollar in the country was Taka 84.80, which increased to Taka 110 after the central bank allowed a floating rate.
As to the standards of the International Monetary Fund, Bangladesh’s gross foreign exchange reserve fell to US $ 19.9 billion on 2nd May.
The financial year 2023–24 saw a 15.36 per cent drop in import payments to US $ 40.88 billion from US $ 48.30 billion during the same period in the previous year. This decline was attributed to some measures implemented by the government and central bank to curtail the importation of commodities, particularly luxury goods.
