Corporates see rise after yr-long slump

After a year-long slump, short-term external borrowing by Bangladeshi corporates is showing signs of recovery, reaching $10.25 billion in April, as easing import restrictions and steady export growth breathe life back into trade-financing demand.

According to data from Bangladesh Bank (BB), the stock of short-term private external debts stood at $10.25 billion in April, up from $10.13 billion in March and $8.90 billion in January, indicating a gradual rebound in corporate borrowing after months of decline.

At its peak in May 2023, the short-term external borrowing stood at $13.95 billion. It then plunged over the months that followed, reaching a low of $8.90 billion in early 2025, before beginning a cautious climb.

Bank officials and money market analysts attribute this rebound to a relaxation of import restrictions, which had previously been imposed to protect dwindling foreign exchange reserves, coupled with robust export performance and record remittance inflows that have helped stabilise the external account.

"With forex reserves recovering and LC (Letter of Credit) openings increasing, corporates have begun to cautiously tap into external credit markets again," said a senior Bangladesh Bank official, requesting anonymity.

The central bank data shows that LC openings for imports stood at $6.13 billion in January, rising to $6.23 billion in February and $6.46 billion in March, pointing to a clear easing in trade finance conditions.

Analysts note that companies in fast-moving consumer goods (FMCG) and clothing and fashion sectors have been active in seeking trade finance, especially ahead of high-demand periods such as Ramadan and Eid, when consumer spending surges significantly.

"With the partial lifting of import controls late last year, businesses are again able to bring in raw materials and intermediate goods," said Dr M Masrur Reaz, Chairman of the Policy Exchange of Bangladesh.

"Sectors like FMCG and fashion retail have capitalised on this to prepare for seasonal spikes in consumption, which naturally requires short-term external financing," he added.

At the same time, steady export growth in recent months has supported stronger business sentiment and improved creditworthiness in the eyes of international lenders.

Bangladesh's private sector continues to rely heavily on regional and global financial hubs for external borrowing.

As of April, Singapore was the leading creditor country with $2.04 billion in short-term loans, followed by China $0.92 billion, Germany $0.81 billion, United Kingdom $0.81 billion, Hong Kong $0.79 billion, and United Arab Emirates $0.77 billion.

This creditor-country data highlights the diversified nature of Bangladesh's trade financing sources, spanning Asia, Europe, and the Middle East.

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