The banking sector witnessed a sharp decline of $11.45 billion in short-term foreign loan inflows in the private sector, resulting in a financial account deficit and increased foreign exchange reserve depletion. According to Bangladesh Bank data, short-term foreign loans in the private sector amounted to $25.8 billion by December 2023, reflecting a 31% YoY decrease.
The deficit contributed to the central bank selling dollars from its reserves, reducing gross reserves from $26 billion in December 2022 to $19.94 billion by January 2024. Factors include rising global interest rates, the imposition of a 20% withholding tax on interest payments, and reduced demand. Experts suggest the need to increase dollar inflow and credit lines with foreign lenders.
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