Private sector short-term foreign loans decreased slightly in March as businesses focused on repaying existing loans rather than taking new ones.
According to Bangladesh Bank data, short-term foreign loans fell to $11.04 billion in March from $11.07 billion in February and $11.25 billion in January.
This decline continued from $11.79 billion in December and $13.65 billion in June 2023, with a figure of $16.41 billion in December 2022.
Buyer鈥檚 credit also decreased to $5.69 billion in March from $5.77 billion in February.
Bankers attributed the drop in short-term foreign loans to businesses prioritising loan repayments over new borrowing.
They noted that businesses faced challenges in obtaining new foreign loans, possibly due to outstanding loan amounts and reduced confidence from foreign institutions.
The current economic situation, including import restrictions and a dollar crisis, along with high dollar prices, also led to reduced business activities.
However, the falling trend appeared to decline as it now remains stagnant at $11 billion for the last three months.
Debt services also dropped to $1.93 billion in February from $3.11 billion in December.
Deferred payment reduced to $824 million in March from $833 million in February while foreign back-to-back LC declined to $955 million in March from $994 million in February.
Bangladesh鈥檚 external debts crossed $100 billion at the end of December 2023 from $98 billion in June 2023, according to Bangladesh Bank data.
The country鈥檚 foreign debts increased by 52 per cent to $100.6 billion in December 2023 from that of $65.27 billion in June 2020.
This rapid growth in foreign debts raised concerns about the country鈥檚 ability to manage its debt obligations.
A country鈥檚 external debts refer to the total amount of money that the country owes foreign creditors, such as foreign countries, international organisations and foreign private entities.
Experts warned that the high external liability could strain the country鈥檚 finances, with a significant portion of its income going towards debt repayment.
They emphasised the need for Bangladesh to manage its resources carefully and prioritise sustainable economic development to reduce its dependence on foreign borrowing.
Inefficient allocation of loans to productive sectors could pose challenges for repayment. The devaluation of the local currency against the US dollar has made interest payments on foreign loans more expensive.
In July 2021, the exchange rate per dollar in the country was Tk 84.80, which increased to Tk 110 after the central bank allowed a floating rate.
The gross foreign exchange reserve in Bangladesh, according to International Monetary Fund guidelines, dropped to $19.9 billion on May 2.
Import payments for the July-February period in the financial year 2023-24 decreased by 15.36 per cent to $40.88 billion, compared with those of $48.30 billion in the same period of the financial year 2022-23, due to various initiatives taken by the government and the central bank to reduce imports of commodities, especially those of luxurious ones.
