63pc of private foreign borrowing goes to RMG, textile

FT ONLINE

Around 63 per cent of the total fund under private commercial foreign borrowing goes to the country’s ready-made garment (RMG) and textile sector.

A review paper on the treasury operation of the country’s banks in 2017 unveiled the scenario.

“RMG and related sectors borrowed maximum amount from the foreign source,” said the paper. “RMG, sweater, dying, knitting and textile together contributed around 63 per cent of the total foreign currency borrowing.”

The paper, prepared by Bangladesh Institute of Bank Management (BIBM), also showed that power sector is another sector which borrowed significantly from the external sources.

20 per cent of the total foreign commercial borrowing goes to the power sector.

In 2017, total private commercial borrowing stood at Tk 11.34 billion which was Tk 9.25 billion in 2016.

The paper also observed that as the RMG and related sectors are engaged in export and their earning is linked to foreign currency so they may be less exposed to the repayment risk.

“But sector like power is exposed to foreign exchange risk as it will not generate any revenue in foreign currency which should be a major concern,” add the review paper.

Other sectors availed the foreign commercial borrowing include plastic, pharmaceuticals, service, jute, airlines