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Bangladesh’s external debts declined by about $2.53 billion to $92.69 billion at the end of September 2022, compared with the figure at the end of September 2021 amid volatility on the global foreign exchange market.
The figure hit $95.23 billion at the end of June from $93.23 billion at the beginning of April 2022, according to Bangladesh Bank data.
The amount of loans received by the country’s private sector from foreign sources fell to $25.4 billion at the end of September from $25.95 billion at the end of June.
It was first time since December 2020 that the foreign debts in the private sector dropped as companies were reluctant to borrow from foreign sources due to high borrowing costs, bankers said.
Private firms incurred losses as the depreciation of local currency taka forced them to repay loans by purchasing dollars at higher prices, they said.
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The private sector’s foreign loans, however, increased by 29 per cent in September 2022 compared with that of $19.68 billion in September 2021.
Usually, a country receives foreign loans from multilateral lending institutions, including the World Bank, the International Monetary Fund, the Islamic Development Bank, the Asian Development Bank, and large overseas commercial banks and institutions.
According to the central bank data, the amount of foreign loans taken by the government was $67.29 billion at the end of September 2022.
Of the amount, about $56.54 billion was directly borrowed by the government as long-term loans.
The remaining $10.75 billion was borrowed by various government institutions.
The country’s foreign debts have more than doubled in just six years.
The debts were at $81.57 billion in the financial year 2020–21 against $45.81 billion in 2016–17.
The country has been struggling with the depreciation of the local currency taka against the dollar, with the debt burden worsening due to the dollar appreciation.
The approaching maturity of a number of large foreign loans, with their grace periods ending soon, will almost double the volume of the country’s external debt repayment at $4.02 billion in FY25 against $2.4 billion in FY22, according to the Economic Relations Division.
The ERD has figured out that the overall debt repayment would stand at $2.7 billion in FY23, of which $1.9 billion would be principal and the rest interest.
In FY24, the overall repayment volume would be some $3.28 billion, with $2.3 billion in principal and $980 million in interest.
Meanwhile, the imbalance in foreign trade has created an unstable situation on the country’s currency market.
In July 2021, the exchange rate per dollar in the country was Tk 84.80.
The interbank dollar rate increased to Tk 102 on September 14 after the central bank allowed the rate to be floating.
The country’s foreign exchange reserve dropped to $33.83 billion on December 28, 2022 after reaching a record high of $48.06 billion in August 2021.
The country’s trade deficit hit record $33.24 billion in FY22 against $23.78 billion in FY21.
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