Bangladesh’s foreign debt slips slightly in 3 months

The balance of public and private debt has decreased from $104.37 billion to $103.63 billion

Bangladesh’s foreign debt has edged down in the past three months.

According to newly released data from Bangladesh Bank on Thursday, the country’s total external debt stood at $103.63 billion at the end of December 2024.

The local currency equivalent, based on an exchange rate of Tk 122 to the dollar, places the debt burden at roughly Tk 12.64 trillion.

The government accounted for the lion’s share of the debt, holding $84.21 billion as of December.

The private sector carried $19.42 billion.

Long-term debt taken by both the public and private sectors comprised 87.54 percent of the total, or $90.69 billion.

Short-term obligations made up the remaining $12.95 billion.

This shows a decline of $740 million, or 0.71 percent, from $104.37 billion recorded at the end of September last year.

In September 2024, the government’s foreign debt stood at $84.42 billion, accounting for 80.88 percent of the total debt, while the remaining $19.94 billion went to the private sector.

In that quarter, the total long-term debt of the government and private sectors stood at $91.76 billion, while short-term debts amounted to $12.62 billion.

In December 2023, loans from foreign sources were at $100.64 billion, suggesting an increase of nearly $3 billion over a year, with a 2.98 percent rise.

That growth reflects long-standing trends of foreign borrowing for mega-projects and infrastructure investments during the Awami League’s rule.

After a 15-year regime, deposed prime minister Sheikh Hasina fled the country in August last year in the face of widespread student-led demonstrations.

In July, Bangladesh’s foreign debt was at $103.79 billion.

When the Awami League returned to power in 2009, the government added an estimated $84 billion to the country’s foreign debt.

At the end of 2006, when the BNP-led four-party alliance completed its term, the foreign debt stock was just under $19 billion.

During the two years of the army-backed caretaker government, the stock increased by just over $2 billion, reaching slightly more than $21.19 billion by the end of 2008.

Economists have warned that borrowing became less judicious in recent years, with some loans taken at high interest rates.

Zahid Hussain, former chief economist at the World Bank’s Dhaka office, cited a “crisis of confidence” as the primary reason for the recent slowdown in external borrowing.

“Foreign currency shortages, including unresolved payments to companies like Adani and arrears on aircraft purchases and letters of credit, have contributed to the decline,” he told bdnews24.com.

International rating agencies have downgraded Bangladesh’s credit ratings in the past year, said Zahid.

He said, “Although remittance growth and exports have increased in Bangladesh recently, there has been no significant positive change that would prompt foreigners to increase lending in the country.”