Photo : Messenger
The country’s external debt of the private sector continues its downtrend as by the end of January, the first month of this year, the foreign debt position amounted to 11.25 billion dollars or 1125 crores.
This reflects a decrease of 53.85 crore dollars compared to the previous month of December. Analysts believe that the reduction in foreign debt within just one month has put pressure on reserves.
Simultaneously, the central bank has indicated that this pressure will persist due to higher repayments compared to borrowings.
Of late, an updated report from Bangladesh Bank (BB) has disclosed this information. According to sources, the external debt position in the final month of the previous year amounted to 1179.30 crores dollars, indicating a decrease of 23.22 crore dollars compared to the preceding month of November. In November, private sector foreign debt stood at $1196.52 crore, resulting in a decline of 71.07 crore dollars in just two months.
During the period under discussion, foreign debt to the private sector has come down to half of the previous year. In January 2023, the foreign debt came to 53 crore dollars. Which stood at 280 crore dollars at the end of this January.
An official of the concerned department of Bangladesh Bank told The Daily Messenger, "Foreign debt is decreasing. One good thing about it is that we are not defaulting. But the bad thing is that you have to pay more than you get the loan. As a result of which foreign exchange reserves are decreasing. The reserve cannot be stabilised in any way.
According to sources, the highest amount of debt has been paid off in the Asian country of Singapore. Around 8.20 crore was paid to the country in a span of one month. At present, the debt status of the country stands at 204 crore dollars. The United Arab Emirates was in the second position. The country's debt stood at 19.69 billion dollars at the end of January. In January, the country was paid 7.34 crore dollars.
China was in the third position in the list. 3.18 crore dollars were paid to the country in one month. At the end of December, the country's debt stood at $90.15 crore. Which stood at 87.96 crore dollars at the end of January. The debt of the United Kingdom, which is in fourth place, stood at 71.10 crore dollars at the end of January. Which was 74.25 crore dollars in the previous month of December. That is, the debt of this country has decreased to 3.22 crore dollars in one month.
However, debt has increased in some countries. Hong Kong is one of them. Loans from the country have increased by 3.79 crore dollars in one month. At the end of December, the country's debt was $89.16 crore. Which increased to 92.95 crore dollars in January. In another country in Asia, Malaysia's debt has increased in the country's private sector. In December, the debt to the country was 13.41 crore dollars which in January increased by 9 million dollars to 14.32 crore dollars.
On this issue, noted Economist Dr. Zahid Hussain told The Daily Messenger, "Foreign loans typically have short durations, which can create some pressure for repayment. However, the current situation has intensified pressure on our country to service its debt amidst a reserve crisis. Amidst the ongoing foreign exchange crisis, the required funds for debt repayment are not readily available. Consequently, separate arrangements must be made to meet these payment obligations.”
The former lead economist of the World Bank's Dhaka office Zahid Hussain also said, “The private sector ought to exercise greater caution when considering foreign loans. It is advisable to prioritise borrowing from countries with favorable lending terms and repayment conditions. In this regard, it may be prudent to avoid seeking loans from countries like China, Russia, and the United Arab Emirates.”
Messenger/Fameema
