Bangladesh’s external debt climbed to $103 billion by the end of June 2023, following a slight dip earlier in the year, according to data from the central bank.

This marks a 4% increase in external debt during the April-June quarter compared to the previous quarter.

The latest figures show that public sector debt continues to dominate Bangladesh’s external borrowing. Of the total $103 billion, the public sector accounted for $83.21 billion, while the private sector held $20.57 billion.

The rise in debt comes after a brief decline in March, when the country’s external debt dropped to $99.30 billion from over $100 billion in December 2022. This is the first time in Bangladesh’s history that its external debt has exceeded $100 billion, setting a new high.

The increase in debt, particularly in the public sector, reflects the country’s growing need for foreign financing to manage development projects and infrastructure investments. Data from Bangladesh Bank indicates that public sector external debt grew by 5.32% in the April-June period, compared to a much slower growth rate of 1.37% for private sector debt.

Meanwhile, private-sector borrowing from foreign lenders has slowed as businesses focus on repaying existing loans rather than taking on new debt. Industry insiders attribute this shift to the sharp rise in the value of the US dollar against the Bangladeshi taka and increasing global interest rates, which have made foreign loans more expensive.

While Bangladesh’s external debt remains within limits deemed sustainable by the International Monetary Fund (IMF), the rising debt levels are becoming a concern.

Economists warn that the country’s ability to manage this rising debt load will depend on several factors, including export performance, remittance flows, and access to concessional loans from development partners.