Corporate external borrowing continues to fall amid economic slowdown with the stock of short-term overseas debt having dropped to $10.52 billion in October last.
Officials and money-market analysts termed such continuous decline in private-sector foreign debt not a good sign for the private sector-led economy as interest rates on the global market stabilising and marginal easing of import compression on the domestic market.
Apart from prevailing energy crisis facing the industrial hubs and depreciation of the local currency against the American greenback, the economic stalemate following recent mass uprising that led to the fall of the Sheikh Hasina regime in early August prompted the private entrepreneurs to be very conservative regarding expansion of their businesses, according to them.
According to the latest statistics of 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 started dropping, having dropped to $11.25 billion in January 2024 followed by $ 11.07 billion, $11.04 billion, $ 11.14 billion and $11.04 billion in February, March, April and May respectively, according to the latest available data.
In June last, the stock of one-year-long foreign borrowings by the private entrepreneurs made a significant upturn to $11.40 billion.
Since then, the figure started dropping to reach $11.32 billion in July, $11.20 billion in August and $10.73 billion in September.
In terms of creditor-country-wise short-term private external debts, Singapore topped the list with $1.95 billion followed by the United Arab Emirates $1.38 billion, China $0.92 billion, Hong Kong $0.92 billion, Germany $0.82 billion and United States of America $0.67 billion.
Seeking anonymity, a BB official said the fall in overseas debts would certainly relieve pressure on the forex reserves to some extent.
He said the private-debt buildup had increased significantly in June to reach $ 11.40 billion because interest rates on the global market have been stabilising.
But the sum started dropping after July when the country witnessed buildup of the recent student-mass uprising that ultimately led to the fall of the Sheikh Hasina government on August 05, 2024.
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.
President of Bangladesh Chamber of Industries (BCI) Anwar-ul Alam Chowdhury said the private-sector players have been passing through a situation for the last several months which is not suitable for business.
He said 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 debt as well as the domestic borrowing by the private entrepreneurs went down," Mr Chowdhury, also chairman of Evince Group, said on a note of frustration.
Dr M Masrur Reaz, an economist and chairman of the Policy Exchange of Bangladesh, said 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 because of the mass movement from mid-July to early August.
"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 said.
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