The private firms are sharply retreating from short-term external borrowing, with the outstanding stock falling to $10.13 billion in 2024 from $16.42 billion in 2022, according to Bangladesh Bank's (BB) latest data.
The monthly figures for 2025 show the slide continuing, reaching $9.62 billion in September this year down from $9.80 billion in January, reflecting a clear corporate shift away from foreign short-term credit amid rising global costs and exchange-rate uncertainty.
The pullback comes as Bangladesh's total external debt remains elevated at about $103.6 billion as of mid-2024, underscoring that the adjustment is concentrated within the private sector rather than the broader economy.
The decline marks a notable reversal from the rapid build-up that began a decade ago, when short-term private external loans jumped from $3.78 billion in 2014 to nearly $15.46 billion by end-2021, supporting import-financed investment and raw-material purchases.
Since 2023, however, firms have been paying down debts faster than taking new loans - a trend confirmed by Bangladesh Bank's financial-flow tables showing repayments outpacing fresh drawings for nine consecutive months through September 2025.
Corporate treasurers say the environment has changed dramatically. International funding costs have risen with higher benchmark rates, global lenders have tightened credit assessments and local borrowers face persistent exchange-rate volatility that makes servicing foreign loans riskier.
As a result, companies are increasingly using internal reserves or local bank facilities instead of offshore short-term credit lines that once looked cheaper.
The cautious stance also reflects a slowdown in imports of capital machinery and intermediate goods, suggesting both risk aversion and softer investment appetite.
Economists view the trend as partly healthy - reducing immediate rollover risk - but warn it could signal weakened private-sector dynamism if sustained.
A senior official at the BB said anonymously, "The private sector's retreat from short-term foreign loans shows prudence under volatile global conditions. They are managing risk more carefully, but we are also seeing reduced import demand, which could point to slowing industrial investment."
A private banker, requesting anonymity, added, "Clients are simply not willing to take new short-term external exposure. Interest costs abroad are high, the Taka's outlook is uncertain and liquidity management has become tougher. Many prefer to repay early or skip renewal altogether."
The combined data underline this behavioral shift. Between January and September 2025, the stock fell each month except brief upticks in April and May, as repayments on both principal and interest exceeded new borrowings. The value of debt service in that period stood around $12.8 billion, compared to new drawings of roughly $12.2 billion, keeping the balance negative.
Analysts note that while the move strengthens the balance-of-payments position and cushions foreign-exchange pressure in the short term, the broader investment outlook depends on how quickly confidence returns.
Bangladesh's corporate sector is clearly signalling caution - preferring balance-sheet safety over expansion - in a year when total external obligations remain above the $100-billion threshold.
