Bangladesh has the highest external debt-to-exports ratio among 5 Asian countries

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The country’s external debt-to-exports ratio would be the highest among five countries in South and Southeast Asia, researchers found from a recent study.

According to the study, Bangladesh’s external debt-to-exports ratio is 125, while it is 25 in Vietnam, 90 in the Maldives, 18 in Bhutan and 30 in Nepal.

That means Bangladesh could face the greatest pressure among these five countries to repay its external debts, researchers said.

The external debt-to-exports ratio prescribed by the International Monetary Fund (IMF) is 240.

Although Bangladesh’s external debt-to-exports ratio is below the threshold prescribed by the IMF, Bangladesh needs to focus on boosting its export performance, experts said in the research paper presented at the “Banking Conference annual 2022”, organized by the Bangladesh Institute of Banking Management (BIBM) on Saturday.

Md Salim Al Mamun, Additional Director, Chief Economist Unit, Bangladesh Bank, Md Ezazul Islam, Its Executive Director, and Mohammad Anisur Rahman, Additional Director, Foreign Reserve and Foreign Exchange Management Department Treasury, jointly conducted the research titled “External Debt Sustainability Analysis of Bangladesh Under Stressed Macroeconomic Scenarios”.

The ratio of external debt to exports is defined as the ratio between the total external debt outstanding at the end of the year and the economy’s exports of goods and services for a given year.

It is used to determine the level of indebtedness of a given country.

Compared to some countries, the lowest present value ratio of foreign debt to GDP indicates that Bangladesh has more room to borrow abroad in case of emergency, the researchers said.

According to the study, Bangladesh’s external debt-to-GDP ratio held steady at around 20% from FY11 to FY21, although there has been an upward trend in recent years since the exercise 18.

Public and publicly guaranteed external debt was 17.6% in FY11 and then 16.1% in FY21.

In contrast, the private external debt ratio increased from 1.2% in FY11 to 5.3% in FY21.

Researchers said long-term external debt trended upward from $24,480 million in the second quarter of fiscal 2012 to $66,666 million in the same period of fiscal year. 21, representing growth of 8.3% per year on average.

On the other hand, the short-term external debt also followed an upward trend with some fluctuations from $1,651 million in the second quarter of FY12 to $14,186 million in the same period of the year. exercise 21.

Here, long-term debt held an 82% share at the end of the second quarter of FY21.

The country’s external lending against electricity, gas and oil has increased significantly to over 70% in the past two years. The construction sector also received significant external loans during this period.

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