BD Expects $1.02B Budget-Support Credits from Foreign Lenders

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.

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.

Bangladesh's government internal debt reached nearly 9 lakh crore taka by April, due to financial crises, lack of investment environment, and downgraded credit ratings, which reduced both domestic and foreign investments. The government's internal borrowing rose by around 1.04 lakh crore taka over the past year,

The Asian Development Bank (ADB) will review nearly $13 billion worth of projects in Bangladesh next week due to implementation delays. A tripartite meeting involving the ADB, the Economic Relations Division (ERD), and project implementers will be held in Dhaka from July 22 to 24 to address these issues.

Bangladesh's private sector entrepreneurs, initially attracted by low interest rates on foreign loans, now face significant challenges due to currency devaluation and a dollar crisis. As of May FY24, the sector's foreign debt stood at $11.04 billion, with $2.02 billion borrowed from the UAE. Rising interest rates and a 32% increase in the dollar rate have diminished interest in foreign loans, prompting a shift towards domestic borrowing.

During a press conference at Gonobhaban, Prime Minister Sheikh Hasina announced that China has agreed to provide Bangladesh with $2 billion in grants, interest-free loans, concessional loans, and commercial loans. This agreement was reached during her recent visit to China, where she met with Chinese President Xi Jinping on 10 July.