External debt crosses $100b again

Bangladesh's external debt increased to $103 billion at the end of June this year after falling slightly in March.

The public sector's share of the external debt amounted to $83.21 billion at the end of June while the private sector accounted for $20.57 billion, central bank data showed.

The country's external debt crossed the $100-billion mark for the first time in December last year before coming down to $99.30 billion in March this year.

Total external debt increased by 4 percent in the April-June quarter compared to the January-March quarter, data showed.

Although the debt buildup remains within the threshold recommended by the International Monetary Fund (IMF), it is becoming a headache for the country in light of unfavourable developments on various economic fronts.

In the April to June quarter, the public sector's share of external debt increased by 5.32 percent while the private sector's share increased by only 1.37 percent, BB data showed.

Industry insiders said private sector external debt slowed as borrowers are repaying existing loans due to the increased value of the US dollar against the taka and rising global interest rates.

A senior central bank official said interest rates for foreign loans stood at 1 to 2 percent around three years ago but had shot up to around 8 to 9 percent at present.

He highlighted that as the main reason for the slow growth of private sector external debt.

Economic experts said that if external debt continues to rise, repayment challenges will mount given the country's slowing earning capacity in terms of both revenue and foreign exchange.

They added that both external debt and debt servicing are growing.

Bangladesh's foreign debt servicing surged 25.73 percent in financial year 2023-24 compared to the year prior, when foreign debt servicing, including repayment of the principal amount as well as interest, rose to $3.35 billion.