Country’s debt reached to nearly Tk 20 lakh crore in March
Business Report :
The government’s domestic and foreign debt reached to Tk 19.99 lakh crore, posting a 5.88 percent increase from Tk 18.32 lakh crore in June 2024, intensifying the pressure of debt servicing on the national budget.
According to the latest Quarterly Debt Bulletin released by the Ministry of Finance, the government planned to lean more on the domestic debt market in the medium term to reduce exposure to foreign currency risks.
In June 2024, which marked the end of the last fiscal year of the AL regime, Bangladesh’s debt amount stood at over Tk18.32 lakh crore, as per the January Debt Bulletin published by the Finance Division.
When the Sheikh Hasina-led Awami League returned to power in January 2009, Bangladesh’s total debt stood at Tk2.76 lakh crore.
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 mobilization.
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.