Staff Correspondent:

Bangladesh’s amount of outstanding short-term foreign debt has decreased by nearly $1.34 billion in June, a nearly 11.75 percent drop year-on-year.

The latest data from Bangladesh Bank says that short-term foreign debt stood at $10.06 billion in June. In June 2024, the amount was $11.40 billion.

In May this year, the balance was $10.22 billion.

Short-term foreign debt refers to financing from foreign sources, the repayment period of which is less than one year.

These loans are usually taken out by private companies for business activities such as payments for imported goods, purchase of services, or meeting other short-term financial needs.

According to the latest data from the central bank, in June this year, private sector entrepreneurs took short-term foreign loans worth $1.55 billion. During this time, interest and principal payments from the private sector amounted to $1.85 billion.

This means, Bangladesh’s private sector paid more in interest and principal payments on short-term financing in June than it brought in as foreign loans.

In May, private sector entrepreneurs took out short-term foreign loans worth $1.85 billion. During this time, interest and principal payments amounted to $1.98 billion. This means more was paid than came in that month too.

Bangladesh Bank Governor Ahsan H Mansur said it was unrealistic to believe that investment will increase under the current situation in the country.

“The financial sector has only just become stable. The political sector has not. The security situation is still unstable. Given all this, the expectation that anyone will jump into investments right now is, I would say, fanciful.”

Since the government changeover last August, the flow of foreign loans to the private sector has declined, as has investment in various sectors, leading to a slowdown in the economy.

In January this year, the short-term foreign debt fell below $10 billion after four years. At the end of that month, it stood at $9.8 billion.

Before that, the last time it had dipped below the $10 billion mark was in December, 2020, when it hit $9.20 billion amid the COVID-19 pandemic. In January 2024, the amount was $11.25 billion.