Bangladesh’s external debt dropped by $1.43b

The escalating interest rate of the dollar in the global market triggered a $300 million decline in Bangladesh's private sector short-term foreign debt in October 2023. This intensifies pressure on dollar liquidity and diminishes the country's forex reserves.

Bangladesh is potentially set to receive a $1.08 billion loan from the Asian Development Bank (ADB) and the International Monetary Fund (IMF). The Ministry of Finance aims to present a $400 million loan proposal to the ADB board on December 12, while the IMF board will decide on a $681 million loan, the second tranche of a $4.7 billion loan, on the same day.

The National Board of Revenue (NBR) has exempted businesses from a 20% tax on the interest of foreign loans until February 2024, excluding advance payments. This move is expected to reduce interest costs by 1.5%-2% for businesses. While industry stakeholders welcome the decision, concerns arise about a potential surge in foreign loan payments before the deadline to avoid taxes.

The private sector in Bangladesh encountered difficulties in the first 10 months of 2023 when it had to repay $26.41 billion in short-term foreign debt against loans totaling $21.61 billion. The country grappled with a $4.8 billion gap between receipts and repayments amid a greenback crisis, depleting foreign currency reserves to $19.4 billion by November 29.

Bangladesh has requested China to extend the loan availability period for the Padma Bridge rail-link project by one year, from May 17, 2024, to May 2025. Although the Dhaka-to-Bhanga section of the 'Padma Bridge Rail Link' has commenced commercial train operations, the overall progress on the rail project is behind schedule.

The Asian Development Bank (ADB) has signed agreements with Bangladesh to provide $1.026 billion in loans for five projects. The funding includes a $336.5 million loan to support the establishment of domestic vaccine manufacturing capacity and strengthen regulatory measures for vaccine supply security.