The country鈥檚 external debts fell by $736 million at the end of December 2024 due largely to the clearing of overdue payments and the interim government鈥檚 restrained approach to new overseas borrowing.
According to the data published in the Bangladesh Bank鈥檚 report 鈥楧ebtor classification of external debt of Bangladesh鈥�, the external debts declined to $103.63 billion in the October-December quarter of 2024 compared with those of $104.36 billion in the previous quarter.
In the April-June quarter, the figure stood at $103.40 billion with a 4.5-per cent rise compared with that of $98.93 billion in the January-March quarter.
Economists have attributed the recent decline in the external debts to the political transition following the fall of autocratic Awami League regime on August 5, 2024 amid a mass uprising.
The interim government, which took office on August 8, 2024, has adopted a cautious approach to foreign borrowing, they said.
Following the political changeover on August 5, the Bangladesh Bank cleared nearly $3.3 billion or about 90 per cent of the foreign overdue payments by December, contributing significantly to the reduction in the external debt amount.
The BB data showed that government debts slightly fell to $84.21 billion in December from $84.42 billion in September, while private sector debts decreased to $19.42 billion from $19.94 billion.
Buyers鈥� credit, an arrangement under which companies use foreign loans to finance imports, also dropped to $5.22 billion in December from $5.71 billion in September and $5.76 in June.
Despite the recent drop in foreign debts, the interim government continued to face mounting overseas debt repayment obligations.
Bangladesh鈥檚 external debts surged significantly from $23.5 billion in 2009 to over $100 billion in December 2023 driven by a borrowing spree under the Awami League regime mainly for financing large-scale infrastructure projects.
Economists observed that this massive build-up of foreign debts resulted from flawed fiscal policies and poor project execution during the ousted AL regime.
The accumulation of debts, driven by questionable fiscal policies and widespread inefficiency, sent the per capita debt soaring to $604 in June 2024 from $283 in June 2017, and ordinary people now bear the brunt of this financial misadventure, they said.
The interim government is reviewing the implications of this debt build-up.
Selim Raihan, executive director of the South Asian Network on Economic Modeling, told 抖阴精品 that the volume of foreign loans might decline slightly as the government had already curtailed development spending and was unlikely to adopt an expansionary policy.
He noted that the interim government was expected to remain cautious in securing new foreign financing.
He added that the forthcoming national budget might include a framework for foreign loan management, reflecting this cautious approach.
Selim warned that the current level of foreign debts could become a serious burden for the country, particularly because the returns on investments made with these funds are expected to be very low.
He criticised the previous government for accumulating large volumes of foreign loans indiscriminately, saying that much of the borrowing was not directed towards productive sectors.
He said that a significant portion of the loans were used unnecessarily and the practice became a source of corruption.
A white paper recently submitted to authorities pointed out that the country鈥檚 external debt sustainability had weakened due to an excessive reliance on non-concessional, foreign currency-denominated loans.
The white paper said that several megaprojects taken by the previous regime heavily contributed to the external debt surge.
Economists warn that interest payments would continue to climb in the coming years amid the ongoing foreign currency shortage and weak revenue mobilisation.
The weaknesses are compelling the government to rely on foreign credit, they said.
They stressed the need for strategic debt management to prevent repayment obligations from essential imports and investment.