Private companies in Bangladesh are prioritizing repaying existing short-term foreign loans rather than taking on new debt, according to Bangladesh Bank data. This trend has led to a further decline in these loans.
Short-term foreign loans held by the private sector fell to $11.25 billion in January 2024, down from $11.79 billion in December 2023. This represents a 4.58% decrease in just one month. The figures have dropped significantly since June 2023, when short-term foreign loans stood at $13.65 billion.
Bankers cite several factors contributing to the decrease
Outstanding loan amounts make it challenging to secure new foreign loans.Reduced confidence from foreign lenders due to the current economic situation.Restrictions on imports and a dollar shortage are limiting business activity. Despite the decline in private sector borrowing, Bangladesh’s total foreign debt (including public debt) has decreased. The country’s external debt stood at $96.54 billion at the end of September 2023, down from $98.10 billion at the end of June 2023. This represents a decrease of $1.55 billion.
Businesses are focusing on repaying existing loans.