Bangladesh is having growing difficulty repaying foreign debts, particularly those for the power sector. A recent lawsuit concerning the Ashuganj Power Station Company Ltd (APSCL) emphasizes the issue. The APSCL failed to make a loan installment payment, causing it to dig into its debt service reserve account. This action has disturbed the loan’s international lenders, who are concerned about the company’s and Bangladesh’s overall liquidity levels. The electricity sector’s repayment issues are part of a larger problem, since the country confronts a foreign cash crisis. This predicament puts pressure on the government to find measures to avert future financial problems.

Expatriate arrivals in Bangladesh significantly dropped recently, with expatriate income from July 19-24 amounting to $78 million. This is a sharp decline from the daily average of $79 million in the first 18 days of July. Banking activities were disrupted from July 19-23 due to a curfew and internet shutdown, affecting legal channels for expatriate income. When banks reopened on July 24, transactions resumed but delays persisted. From July 1-24, expatriate income totaled $1.5 billion, compared to $1.586 billion in the same period last year. The first 18 days of July saw $142.2 million in income, indicating a substantial increase compared to the previous year. June recorded the highest monthly expatriate income in three years at $254 million. Despite efforts by the central bank to attract more foreign currency, the ongoing dollar crisis continues to pressure the economy. In the fiscal year 2022-23, Bangladesh received $2.161 billion in expatriate income, rising to $2.391 billion in the fiscal year 2023-24.

Private sector credit growth in Bangladesh has slowed, decreasing from 10.35% in May to 9.8% in June 2024. This decline is attributed to reduced new investment, a contractionary monetary policy, and rising lending rates. In the fiscal year 2023-24, private sector credit growth averaged 10%, compared to 14% in the previous fiscal year. The decrease in credit growth is linked to decreased private investment and higher interest rates, now over 14%, along with the rising dollar price impacting imports. Import letters of credit (LCs) have dropped from around $8 billion per month in FY 2021-22 to $5 billion, with LC settlement down by 13.93% in the first eight months of FY 2023-24 compared to the previous year. Capital equipment imports fell by 25.36% and industrial raw materials by 25.06%. Private credit growth was 12.62% in January 2023 but has steadily declined since then. The central bank’s new monetary policy for H1 FY 2024-25 targets a private sector credit growth rate of 9.8%.