External debt drops by $1.34b in three months

The country’s public-private foreign debt decreased by $1.34 billion in the span of three months.

As of the end of March this year, the total debt stood at $99.30 billion, according to a central bank report.

The report indicates that at the end of December 2023, the country’s external debt reached $100.64 billion for the first time. However, debt in that month rose by more than $4 billion compared to its previous three months.

Bankers noted that the dollar crisis, which began in 2022, has led to a reduction in foreign borrowing by the private sector. The increased value of the dollar against the taka and rising international loan interest rates have prompted businesses to focus on repaying their existing loans. As a result, the country’s external debt is decreasing.

They said the country’s increasing external debt is primarily due to government borrowing. The government secures funds from various sources to support its budget, including loans from the IMF, World Bank, and ADP.

The data shows that at the end of March this year, the Bangladesh government’s foreign debt stood at $79 billion, while the private sector’s debt was $11.04 billion.

Former Chief Economist of the World Bank Dhaka Office, Zahid Hossain, said the private sector’s foreign debt has comparatively increased more in recent years. Additionally, due to the Covid-19 pandemic, loan repayment periods have been extended through deferments. As a result, the pressure to repay these loans has now increased.”

“However, it is positive that short-term foreign debt in the private sector has not increased,” he noted.