Private Sector: Short-term debt falls below $10b

Staff Reporter :

Bangladesh’s private-sector short-term foreign borrowings have continued to decline, falling below $10 billion in January this year for the first time in nearly four years.

According to the latest data from the central bank, the outstanding debt stood at $9.8 billion at the end of January 2025.

In comparison, the country’s outstanding private-sector short-term foreign debt was $11.25 billion in January 2024. The last time the debt was lower was in December 2020, when it amounted to $9.2 billion.

Since then, the private sector’s short-term foreign debt has been steadily increasing. By the end of 2021, it had reached $15.46 billion, a rise of approximately $6 billion within a year.

Experts suggest that the decline in borrowings is due to businesses prioritising debt repayment over new borrowing, as outstanding loan amounts continue to mount.

Rising interest rates on foreign loans, companies delaying expansion plans, and creditors becoming more cautious in light of the country’s foreign exchange reserves position have all contributed to the trend.

Moreover, the downgrade of Bangladesh’s country rating by several international agencies has further eroded confidence, leading to a continued reduction in the private sector’s short-term foreign debt.

According to the central bank’s data, as of the end of January 2025, deferred payment outstanding was $643 million, compared to $972 million at the end of January 2024.

The most notable decline in short-term foreign debt has been in buyer’s credit, which decreased from $5.97 billion in January 2024 to $5.08 billion by the end of January 2025, marking a reduction of approximately $900 million over the year.