Staff Reporter :
In the first three months of 2024 (January- March), the country’s total external debt stood at $99.30 billion, marking a minor decrease of $1.34 billion over three months.
This contrasts with December 2023, when the country’s external debt peaked at $100.64 billion, reflecting a notable increase of over $4 billion within that quarter alone. Economists attribute this fluctuation partly to the ongoing dollar crisis, which commenced in 2022.
The crisis has prompted a reduction in foreign borrowing by the private sector, as businesses prioritize repaying existing loans amidst the dollar’s appreciation against the taka and escalating international loan interest rates. The government, on the other hand, continues to borrow primarily to support its budgetary needs, securing loans from international bodies such as the IMF, World Bank, and through Annual Development Programs (ADP).
As of March this year, Bangladesh’s government foreign debt stood at $79 billion, while the private sector’s debt totaled $11.04 billion.
The decline in short-term foreign borrowings by the private sector has been consistent, with figures dropping to $11 billion in March, continuing a trend observed since December last year. This contrasts with figures of $13.65 billion in June last year and $16.41 billion in December 2022, indicating a strategic shift in economic management.
A recent study by the Centre for Policy Dialogue (CPD) highlighted that between fiscal years 2010-11 and 2022-23, Bangladesh’s total external debt tripled, while debt servicing increased by 2.6 times.
For FY24, Bangladesh anticipates borrowing $10 billion from external sources, underscoring ongoing financial management challenges. During the July-March period of FY24, the government paid $1.05 billion in interest, a stark 117 percent increase from the previous year. Similarly, the repayment of principal foreign loans rose by 22 percent year-on-year to $1.5 billion. Overall, debt servicing surged by 49 percent to $2.57 billion in the same period, highlighting the growing financial obligations faced by the country.