Written by The Banking Post
Bangladesh’s short-term foreign debt fell by 7.42% year-on-year in May 2025, driven by higher repayments than fresh borrowings amid ongoing political and economic uncertainties.
According to data released by Bangladesh Bank, outstanding short-term foreign loans stood at $10.22 billion at the end of May, down from $11.04 billion a year earlier. These loans, typically used for import financing and short-term business needs, have now seen repayments outpace inflows for five consecutive months.
In May, the private sector borrowed $1.85 billion in short-term loans while repayments totalled $1.98 billion. Over the first five months of 2025, inflows reached $6.99 billion, with repayments slightly higher at $7.08 billion.
Economist Majedul Haque, director of research at the Centre for East Asian Foundation, attributed the decline to political instability due to the prolonged absence of an elected government. He also cited recent credit rating downgrades and concerns over foreign exchange reserves and currency stability as contributing factors.
Notably, the short-term debt dropped below $10 billion in January 2025 for the first time in four years, hitting $9.8 billion—its lowest since the $9.2 billion recorded during the peak of the COVID-19 pandemic in December 2020.
In contrast, the outstanding short-term foreign debt was $11.25 billion in January 2024 and ranged between $10.03 billion and $10.13 billion in February and March 2025—each lower than figures from the same months last year.
