Private sector short-term foreign loans dropped further in February as businesses prioritised repaying existing loans over taking new ones.
According to Bangladesh Bank data, the short-term foreign loans declined to $11.07 billion in February from $11.79 billion in December and $13.65 billion in June, 2023.
The figure was $16.41 billion in December 2022.
Buyer鈥檚 credit also dropped to $5.77 billion in February from $6.24 billion in December.
Bankers said that short-term foreign loans dropped as businesses were focusing on repaying existing loans rather than taking new ones.
Businesses also faced challenges in obtaining new foreign loans, possibly due to outstanding loan amounts and reduced confidence from foreign institutions, they said.
The current economic situation, including restrictions on imports and a dollar crisis, and high dollar price also led businesses to reduce their activities, they said.
Debt services also dropped to $1.93 billion in February from $3.11 billion in December.
Bangladesh鈥檚 external debts crossed $100 billion at the end of December from $98 billion in June, according to Bangladesh Bank data.
The country鈥檚 foreign debts increased by 52 per cent to $100.6 billion in December 2023 from $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聽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 $19.89 billion on April 18.
Import payments for the July-February period in the financial year 2023鈥�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鈥�23, due to various initiatives taken by the government and the central bank to reduce imports of commodities, especially those of luxurious ones.