Business Report:
Bangladesh’s private-sector short-term foreign borrowings declined further in June this year fallen to $10.06 billion amid sluggish economic activity.
According to the latest statistics available with Bangladesh Bank (BB), in June last year the outstanding balance of short-term external credits taken by the private players was to $11.40 billion.
The downturn continues to reach $10.13 billion by end of 2024 followed by in January this year fallen below $10 billion for the first time in nearly four years and $10.24 billion, $10.22 billion and $10.06 billion in April, May and June this year respectively.
Experts said identifying reasons to this decrease that businesses prioritize debt repayment over new borrowing as outstanding loan amounts mounting, the rising interest rate for foreign loans, and corporate postponing business-expansion plans and creditors getting hesitant in extending funds.
Apart from prevailing energy crisis facing the industrial hubs and depreciation of the local currency against the American greenback, the economic doldrums following the mass uprising that led to the fall of the Sheikh Hasina regime in early August last year prompted the private entrepreneurs to get conservative regarding expansion of their businesses, according to them.
Additionally, the downgrade of Bangladesh’s country rating by several international agencies has further deepened this lack of confidence. Consequently, the private sector’s short-term foreign debt has been steadily declining.
Bankers think the ruckus associated with the changeover in state power might prompt the private-sector players to be very careful as far as their business-expansion plans are concerned.
But the good part is that the country’s overall imports started increasing in very recent months, giving an early indication of economic rebound following months of sluggishness, they added.
According to the latest data from the central bank, the opening of fresh LCs or letter of credits, generally known as import orders, increased to US$70.72 billion in the FY’25 from $68.77 billion recorded in the previous fiscal year (FY24).
