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Message: <blockquote data-quote="Saif" data-source="post: 7117" data-attributes="member: 7">[URL unfurl="true"]https://www.thedailystar.net/news/bangladesh/news/pvt-sector-external-debt-repayments-outstrip-new-loans-2023-3564621[/URL]<h3 style="text-align: justify">Pvt Sector External Debt: Repayments outstrip new loans in 2023</h3> [ATTACH=full]4073[/ATTACH] The private sector's short-term foreign debt repayment last year was more than in 2023, in a complete reverse of the scenario seen in previous years. Last year, the private sector took on $25.8 billion in short-term foreign loans and repaid $31.14 billion in both principal and interest, according to data from the Bangladesh Bank.<h4 style="text-align: justify"></h4> In 2022, total private sector short-term foreign loans stood at a record $37.25 billion and repayment $36.73 billion. Last year's trend continued into the new year: in January, the private sector took on $1.76 billion in new loans and repaid $2.19 billion. The rising interest rates in the global market in recent times and Bangladesh's macroeconomic instability account for the private sector's repayment outstripping new loans, said Zahid Hussain, a former lead economist of the World Bank's Dhaka office. "Now, the interest rate in the international market is 8-9 percent -- it used to be just 1 percent." As a result, the private sector needed to pay back more than they envisaged when they took on the loans, he said. Another factor is the growing concern over Bangladesh's banking system and macroeconomic situation over the past two years. Global credit rating agencies voiced their concerns about Bangladesh's banking system after many banks could not do letter of credit (LC) settlements in due time because of the foreign exchange crisis. As a result, many foreign creditors were not confident enough to lend money to Bangladesh's private sector players, Hussain said. "Such confidence problem could be the reason for the declining foreign short-term new loans by the private sector," he added. The private sector's dwindling short-term external debt, which soared over the past decade, has posed another problem: the foreign currency stockpile continues to be under immense strain as the inflow of dollars is shrinking with the lower loans. As of March 7, the country's foreign currency reserves stood at $21.15 billion, enough to meet about three months' import bill. In 2022, the private sector's short-term foreign loan soared to $16.42 billion, thanks to low interest rates in the international market. The loan amount was $3.77 billion in 2014. Last year, the private sector's short-term foreign debt stock fell 28 percent to $11.79 billion, which declined further in January this year and stood at $11.25 billion.</blockquote>

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