TDS Desk:

The government’s total outstanding debt increased to nearly Tk 20 lakh crore by March 2025, intensifying the pressure of debt servicing on the national budget.

The total debt reached Tk 1,999,928 crore, posting a 5.88 percent increase from Tk 1,888,787 crore in June 2024, according to the Quarterly Debt Bulletin released by the Ministry of Finance.

Both domestic and external debt has continued to grow steadily from Tk 1,344,443 crore in June 2022.

According to the bulletin, the government planned to lean more on the domestic debt market in the medium term to reduce exposure to foreign currency risks.

As of March this year, foreign loans made up around 42 percent of total debt, or Tk 841,992 crore, slightly down from 43 percent in December 2024.

Domestic borrowing contributed Tk 1,157,936 crore, with the banking sector alone providing Tk 737,669 crore, according to finance ministry data.

By the end of FY24, total debt stood at 37.62 percent of the gross domestic product (GDP).

Although Bangladesh’s external debt-to-GDP ratio is still moderate in comparison to some other developing countries and falls within the International Monetary Fund’s (IMF) “safe zone”, the bulletin pointed to the rapid accumulation of debt, a move towards less concessional financing, and ongoing macroeconomic challenges.

Referring to those as “red flags”, the bulletin said they are contributing to mounting risks.

To ensure long-term sustainability, the bulletin called for prudent debt management, careful selection of new projects, improved project execution, and stronger domestic resource mobilisation.

The Medium-Term Macroeconomic Policy Statement for FY26 to FY28 stressed that addressing the challenges of low revenue collection and rising debt servicing costs is key to keeping the economy stable and on a growth path.

During the first three quarters of FY25, the government’s interest payments climbed by 10 percent year-on-year. External interest payments saw a sharper rise of 23 percent during the July-March period compared to the same period in FY24.

So, effective management of interest costs on government borrowing is not just a matter of sound financial management for Bangladesh; it is fundamental to ensuring macroeconomic stability, protecting its foreign exchange reserves, fostering sustainable economic growth, maintaining international creditworthiness, and securing its future development prospects, said the bulletin.

Interest payments on treasury securities jumped by 45 percent, while payments on national savings certificates fell by 25 percent, according to finance ministry data.

Bangladesh is set to graduate from the least developed country (LDC) status in 2026. Once that happens, access to highly concessional financing is expected to diminish.

The policy statement said that without meaningful reforms in revenue collection, export diversification, and debt management, the debt burden and associated risks could increase.

The government projects total debt will reach Tk 23 lakh crore by the end of FY26. It is forecast to cross Tk 26 lakh crore in FY27 and hit Tk 28 lakh crore by FY28.

As of March 2025, the government’s contingent liabilities stood at Tk 66,180 crore, down 7 percent from June 2024.

Most guarantees were issued to entities involved in power generation, mineral resources, fertiliser production, and organisations such as Biman Bangladesh Airlines and the Trading Corporation of Bangladesh (TCB).