Foreign Debt Rises by $1.30 Billion in Three Months, Raising Questions Over Utilization Efficiency

Staff Correspondent

The country’s external debt burden has risen again under the interim government. In the three months to the end of the latest December quarter, external debt increased by $1.30 billion, bringing the total external debt to $113.51 billion—an indication of renewed pressure on the economy.

Bangladesh Bank released an updated report on Tuesday. Earlier, the total external debt at the end of the September quarter was a little over $112 billion.

Although the amount of this loan was $113.58 billion in the June quarter, it decreased slightly in the interim period, but the increase was clear again in the last quarter.

Central bank officials say that overall credit has increased due to new borrowing in both the public and private sectors. However, this increase is due to structural factors as well as some temporary accounting effects.

In particular, the amount added to the figure due to the suspension of ACU payments in the December quarter. At the same time, foreign currency inflows into offshore banking units—about $400 million—contributed to the increase in the amount of loans.

According to economists, this growth is not just statistical, but its long-term impact will depend on the use of credit.

Dr. Zahid Hossain, former chief economist at the World Bank’s Dhaka office, believes that while foreign debt is normal for development projects, its effectiveness is now a key question. In his words, this debt could become an additional burden on the economy in the future if investment in the productive sector is not ensured.

There are similar concerns within the central bank. Officials say that foreign loans, if used properly, can increase repayment capacity; otherwise, they put pressure on foreign exchange reserves and the macroeconomy. As a result, the government needs to monitor borrowing as well as its use and results more closely.

According to the data, the total external debt is $93.46 billion in the public sector and $20.05 billion in the private sector. Debt has increased in both sectors compared to the September quarter, indicating that the overall trend of the country’s debt dependence continues.

According to analysts, this continued increase in foreign debt, while not an immediate crisis for the economy, carries a message of future risks—especially when export earnings, remittance flows, and foreign exchange reserves are still under pressure.

Therefore, efficiency and accountability in debt management are now more important than ever before.