Bangladesh receives record $8.41 bn foreign loans in 11 months
Bangladesh received a record $8.41 billion in foreign loans in 11 months of current FY2021-22, the Economic Relations Division said on Thursday. At current exchange rate the amount is equivalent to Tk 78221 crore, the highest loan ever in a single fiscal year. The amount is 47 per cent higher than the previous fiscal year. The ERD officials estimate that the foreign debt will exceed $9 billion by the end of the fiscal year on June 30, 2022. After the economic crisis in Sri Lanka, there is a lot of talk about Bangladesh's foreign debt. Also read: Default loans cross over 126 crore: Finance Minister However, economists and analysts are dismissing the comparison between the two countries. They say foreign debt is still below 13 per cent of Bangladesh's GDP. In case of Sri Lanka, it is close to 50 per cent. Economist and researcher Ahsan H. Mansur said, "The leap has been made by receiving more loans than expected from various donor countries and organizations, including the World Bank and the ADB, to offset the effects of the two-year pandemic." Analysis of ERD data shows that in the last FY2020-21, Bangladesh received $7.10 loan assistance from development partners. Before that, in the fiscal year 2019-20, Bangladesh received $7.38 billion foreign loan that was the history of the country till FY 21. Also read: FBCCI seeks loan moratorium till December Foreign debt has been increasing in Bangladesh since the fiscal year 2017-18. In the same year, it jumped to $6.37 billion. Then in the fiscal year 2018-19 it stood at Tk6.54 billion.
Why Bangladesh Inc is wary of a sturdy dollar
A stronger US dollar is usually grody news for emerging market economies with heavy dollar-denominated debt. And Bangladesh is no exception. In this country, the corporate sector has borrowed heavily in foreign currencies from external sources at lower interest rates. A stronger dollar has now made their foreign debt expensive, hitting them really hard as they struggle to tide over the Covid-induced economic slowdown. Those entrepreneurs who took hassle-free loans from abroad some five years ago -- when the interest rate on bank loans in Bangladesh was more than 12% -- are now facing the wrath of the appreciating dollar, having forced to count 10% more on money they borrowed at just 3-4% interest. The approved debt from external sources for Bangladesh’s private sector stood at USD 14,003.95 million as of June 2021, of which USD 9,601.27 million had been repaid along with USD 677.37 million interest. In the January to March quarter of the last financial year, the approved external debt for the private sector was USD 617.95 million, while it declined to USD 230.81 million in the last quarter of 2020-21 fiscal, as per Bangladesh Bank (BB) statistics. Read: Govt targets 17% expenditure of GDP for next two fiscals: Document
BB eases accessing foreign loans by foreign companies
Bangladesh Bank has brought further flexibility in accessing foreign loans by foreign-owned companies operating in Bangladesh.
Credit rating companies tie up to let Bangladeshi firms access foreign loans
Two Hong Kong based credit rating companies have begun working in Bangladesh from today (Tuesday) to provide assistance to banks, financial institutions and business houses for getting credit from abroad.