Staff Reporter :
Private sector short-term foreign borrowing continues to decline, with the external debt stock dropping to $10.73 billion in September as entrepreneurs put the brakes on business expansion.
According to the latest statistics from Bangladesh Bank (BB), the stock of one-year foreign borrowings by private entrepreneurs had risen to $11.40 billion earlier, but this figure dipped to $11.32 billion in July and further fell to $11.19 billion in August.
In comparison to September 2023, outstanding short-term external credits have decreased by $1.70 billion, falling from $12.43 billion last year to $10.73 billion this September.
When considering creditor-country-wise short-term private external debts, Singapore leads the list with $1.95 billion, followed by the United Arab Emirates ($1.62 billion), Hong Kong ($1.00 billion), China ($0.91 billion), Germany ($0.79 billion), and India ($0.67 billion).
Experts attribute this decline in private-sector foreign borrowing to various factors, including the ongoing political transition, which has created an uncertain business environment.
Additionally, issues such as a weak law-and-order situation, and unreliable power and gas supplies, have contributed to the slowdown.
Furthermore, private sector credit growth decelerated to its slowest pace in three years, reaching just 9.20 per cent in September, down from 9.86 per cent the previous month. This marks the slowest credit growth since September 2021, when it stood at 8.77 per cent.
In a related development, the World Bank (WB) has downgraded its outlook for Bangladesh’s economic growth, forecasting a modest 4 per cent growth for the fiscal year 2024-25, down from an earlier prediction of 5.7 per cent. This marks the lowest growth estimate in nearly three decades, excluding the pandemic-affected fiscal year of 2019-20.
While South Asia remains on track to be the fastest-growing region globally, with the World Bank revising its growth forecast for the region upwards to 6.4 per cent this year, Bangladesh is projected to be an outlier, slipping to its lowest growth rate in decades.
