Pvt borrowing abroad ticks up in Apr

After months of a downward trend, corporate borrowing from external sources edged up slightly in April, with the stock of short-term debt expanding to $11.10 billion.
Economists and private sector players believe the economy is starting to experience a marginal easing of import compression, which could lead to a rise in short-term foreign debt by private enterprises.
The outstanding balance of short-term external credit taken by private sector players stood at $13.87 billion in April 2023, according to Bangladesh Bank (BB) statistics. It then increased slightly in May to $13.95 billion.
Since then, the foreign debt curve has resumed its downward trend, reaching $13.66 billion in June.
The decline continued in July to $13.36 billion, in August $12.84 billion, in September $12.43 billion, in October $12.13 billion, in November $11.97 billion, in December $11.79 billion, in January 2024 $11.25 billion, in February $11.07 billion and in March to $11.04 billion.
But the outstanding balance showed a slight increase in April this year, reaching $11.10 billion, according to central bank data.
In terms of creditor countries for short-term private external debt, the United Arab Emirates (UAE) topped the list with $1.99 billion, followed by Singapore $1.79 billion, Hong Kong $1.13 billion, China $0.89 billion, India $0.69 billion and the United Kingdom $0.68 billion.
While speaking on condition of anonymity, a Bangladesh Bank official said interest rates in the global market have begun to stabilise, while managing funds from domestic sources has become tighter due to the contractionary monetary regime.
The central bank official suggested that this might prompt private sector players to borrow funds from abroad. This could be a reason behind the slight rise in private sector short-term external debt.
Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said the private sector has been facing multiple strains such as the energy crisis, rising funding costs, a volatile foreign exchange market and disruptions to the global supply chain caused by the Russia-Ukraine war.
As a matter of fact, businesses are postponing expansion plans, Mr Hatem added. "Still the latest
Bangladesh Bank figures show a slight increase in short-term foreign borrowing in April."
"This is interesting," he said, "but it would be premature to comment based on data from a single month. To understand the real trend, we need to observe data for at least three to four months."
According to Bangladesh Bank data, the demand for formal credit from the country's banking channels by the private sector fell to 9.95 per cent in January this year -- down from 10.13 per cent in December last year.
Dr M Masrur Reaz, founding chairman of the local think-tank Policy Exchange of Bangladesh, said a major portion of the short-term external borrowing is being used for trade financing. And the import restrictions appeared to have eased slightly recently due to the Ramadan and Eid economy.
On the other hand, the economist said overall orders for readymade garment (RMG) products have begun to pick up since the beginning of this year, which could be another factor behind the rise in the outstanding balance of short-term foreign debts.

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