Corporate external borrowing keeps ebbing down amid sluggish economic activity, at home as also abroad, with the short-term overseas debt stock having dropped to $10.06 billion in June.
Officials and money-market analysts see such unrelenting contraction in private-sector foreign debt not a good sign for the private sector-led economy as interest rates on the global market stabilising and import compression on the domestic market easing.
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.
According to the latest statistics available with Bangladesh Bank (BB), the outstanding balance of short-term external credits taken by the private players was $13.95 billion even in May 2023. Thereafter, it kept sliding, having dropped to $11.40 billion in June 2024.
The downturn continues to reach $10.13 billion by end of 2024 followed by $10.24 billion, $10.22 billion and $10.06 billion in April, May and June this year respectively.
In terms of creditor-country-wise short-term private external debts, Singapore topped the list with $1.89 billion followed by China $0.94 billion, the United Arab Emirates $0.93 billion, Hong Kong $0.84 billion, the United Kingdom $0.81 billion and Germany $0.64 billion.
Seeking anonymity, a BB official says the fall in overseas debts would certainly relieve pressure on the forex reserves to some extent although the stock of foreign currencies continues to improve because of growing inflow of remittance and export receipts.
The central banker thinks 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," the BB official notes.
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).
In FY'23, the volume of import orders was worth $67.63 billion. The last fiscal year's import orders were $1.95-billion higher from that of the FY'24.
The volume of settlements against the import orders climbed up to $71.14 billion in FY'25 from $66.07 billion recorded in FY'24.
President of Bangladesh Chamber of Industries (BCI) Anwar-ul Alam Chowdhury says the private-sector players have been passing through a situation for the last several months which is not suitable for business.
He mentions that industrial production has been severely affected because of the persistent energy crisis and ongoing unrest in the industrial belts. On the other hand, the complete resumption of business activities after the latest mass uprising is still uncertain.
"Then, why people will invest under such situation? That's why the volume of overseas debts as well as the domestic borrowing by the private entrepreneurs went down," Mr Chowdhury, also chairman of Evince Group, says on a note of frustration.
Dr M Masrur Reaz, an economist and chairman of the Policy Exchange of Bangladesh, says despite favourable condition externally for lower borrowing costs, the private- sector players did not take the opportunity due to severe disruptions to supply chains and production particularly in the industrial hubs.
"There were also too many post-uprising uncertainties like governance, law and order and resumption of business activities, which probably forced the entrepreneurs to defer their investment and business-expansion plans," he told the FE writer.
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