Bangladesh’s total public debt reached nearly Tk 2,000,000 crore by March 2025, up 5.88% from June 2024, reflecting growth in both domestic and external borrowing. The government is shifting toward domestic debt to reduce foreign currency risk, with domestic borrowing at Tk 1,157,936 crore and foreign debt at Tk 841,992 crore. Debt now equals 37.62% of GDP, with rising interest payments—external interest surged 23% year-on-year, and treasury securities payments jumped 45%. With Bangladesh set to graduate from Least Developed Country status in 2026, access to concessional financing will decline, raising future borrowing costs. The government projects debt could reach Tk 28 lakh crore by FY28. The Finance Ministry stresses urgent reforms in debt management, revenue mobilisation, project execution, and export diversification to maintain fiscal stability and safeguard economic growth.
Accordion body...According to the Quarterly Debt Bulletin released by the Ministry of Finance yesterday, total debt stood at Tk 1,999,928 crore—a 5.88% rise from Tk 1,888,787 crore in June 2024. This marks a steady increase from Tk 1,344,443 crore recorded in June 2022, reflecting both domestic and external debt growth.
The bulletin highlighted the government’s strategic shift towards relying more heavily on domestic borrowing in the medium term, aiming to mitigate foreign currency risk. As of March 2025, foreign debt accounted for about 42% of the total debt—approximately Tk 841,992 crore—slightly down from 43% in December 2024. In contrast, domestic borrowing rose to Tk 1,157,936 crore, with Tk 737,669 crore sourced from the banking sector alone.
By the end of FY24, total public debt equaled 37.62% of the gross domestic product (GDP). Although Bangladesh’s external debt-to-GDP ratio remains within the International Monetary Fund’s (IMF) "safe zone" and is considered moderate compared to other developing economies, the bulletin flagged growing concerns. These include the rapid build-up of debt, a shift towards less concessional financing, and persistent macroeconomic vulnerabilities—described as “red flags” that elevate fiscal risk.
To safeguard long-term sustainability, the bulletin stressed the need for prudent debt management, better project selection and execution, and stronger domestic revenue mobilisation.
The Medium-Term Macroeconomic Policy Statement (FY26–FY28) echoed these concerns, emphasizing that tackling low revenue collection and rising debt servicing costs is critical for economic stability and growth.
During the first nine months of FY25, the government’s interest payments rose by 10% year-on-year. Notably, external interest payments surged by 23% during the July–March period compared to the same stretch in FY24.
As the bulletin concluded, effective management of interest costs is not merely a matter of fiscal discipline—it is central to maintaining macroeconomic stability, safeguarding foreign reserves, preserving credit ratings, supporting sustainable growth, and ensuring Bangladesh’s future development trajectory.
Interest payments on treasury securities soared by 45%, while payments on national savings certificates declined by 25%, according to data from the Ministry of Finance.
As Bangladesh prepares to graduate from its least developed country (LDC) status in 2026, it faces the looming challenge of reduced access to highly concessional financing.
The Medium-Term Macroeconomic Policy Statement warned that without significant reforms in revenue collection, export diversification, and debt management, the country could face a rising debt burden and increased fiscal risks.
Bangladesh’s total outstanding government debt has ballooned to nearly Tk 20 lakh crore by March 2025, intensifying fears of rising debt servicing pressures that could weigh heavily on the national budget and the country’s long-term financial resilience.
According to the latest Quarterly Debt Bulletin released by the Ministry of Finance, the total public debt stood at Tk 1,999,928 crore—a 5.88% rise from Tk 1,888,787 crore in June 2024. This trajectory continues a steady upward trend from Tk 1,344,443 crore recorded in June 2022, underscoring persistent growth in both domestic and external borrowing.
The bulletin outlines a shift in the government's financing strategy, with a deliberate pivot toward domestic borrowing to limit exposure to foreign currency risks. As of March 2025, external loans made up approximately 42% of the total debt—around Tk 841,992 crore—down slightly from 43% in December 2024. On the other hand, domestic borrowing surged to Tk 1,157,936 crore, with a significant Tk 737,669 crore sourced directly from the banking sector.
By the end of FY24, Bangladesh’s total public debt reached 37.62% of its gross domestic product (GDP). Although the external debt-to-GDP ratio remains moderate and within the International Monetary Fund’s (IMF) designated "safe zone," the bulletin sounded alarms over troubling trends: the swift accumulation of debt, declining access to concessional loans, and enduring macroeconomic vulnerabilities.
These developments, flagged as critical “red signals” by the Finance Ministry, point toward growing fiscal stress and demand urgent attention.
The bulletin strongly urged prudent debt management, better prioritisation of development projects, faster execution timelines, and robust domestic revenue mobilisation. Echoing these concerns, the Medium-Term Macroeconomic Policy Statement for FY26–FY28 warned that unless sweeping reforms are undertaken—especially in revenue collection, export diversification, and debt strategy—the nation could find itself on a precarious fiscal cliff.
Adding to the concern is the spike in debt servicing costs. During the first nine months of FY25, government interest payments rose by 10% year-on-year, with external interest costs skyrocketing by 23% over the July–March period compared to the same stretch in FY24. More worryingly, interest payments on treasury securities soared by 45%, while returns on national savings certificates dropped by 25%, according to Ministry data—indicating a shifting burden from public savings to market-based borrowing mechanisms.
Bangladesh’s imminent graduation from Least Developed Country (LDC) status in 2026 only adds to the stakes. The shift will result in reduced access to soft loans and highly concessional financing, making future borrowing more expensive and potentially riskier.
In a sobering forecast, the government projects total debt will escalate to Tk 23 lakh crore by FY26, surge past Tk 26 lakh crore in FY27, and reach Tk 28 lakh crore by FY28—adding another layer of pressure on a budget already strained by subsidies, rising import costs, and shrinking fiscal space.
As of March 2025, the government's contingent liabilities—guarantees largely extended to state-run entities such as power and fertiliser companies, Biman Bangladesh Airlines, and the Trading Corporation of Bangladesh—stood at Tk 66,180 crore, slightly down from June 2024. But the exposure remains significant.
In essence, Bangladesh now stands at a fiscal crossroads.
The era of cheap credit is coming to an end, while the costs of inaction are rising. Without bold reforms, effective debt management, and a reinvigorated strategy for revenue generation and economic diversification, the country risks being overwhelmed by the very debts once taken to fuel development.
As the Debt Bulletin concluded, managing interest costs is no longer just about balancing the books—it is about preserving macroeconomic stability, shielding foreign reserves, safeguarding credit ratings, and ultimately, protecting the nation's economic sovereignty.
The clock is ticking—and the choices made in the coming months could shape Bangladesh’s fiscal destiny for decades to come.
Projections indicate that the government's total outstanding debt will climb to Tk 23 lakh crore by the end of FY26, rise to over Tk 26 lakh crore in FY27, and reach approximately Tk 28 lakh crore by FY28.
As of March 2025, contingent liabilities stood at Tk 66,180 crore—marking a 7% decrease compared to June 2024.
The majority of these government guarantees were extended to state-owned and strategic entities, particularly in sectors such as power generation, mineral resources, fertiliser production, as well as to organisations like Biman Bangladesh Airlines and the Trading Corporation of Bangladesh (TCB).
