Mounting debt crisis among state entities demands urgent reform

The alarming fiscal imbalance revealed in the government’s latest analysis of 14 high-risk state-owned and autonomous entities is a stark reminder of the urgent need for public sector financial reform in Bangladesh.

The New Nation on Tuesday reported that with liabilities exceeding liquid assets by over 60 times — amounting to a staggering Tk 1,72,016.94 crore in debt against a mere Tk 2,837.23 crore in cash holdings — these organisations are teetering on the brink of insolvency. The potential knock-on effects for the national economy are deeply concerning.

The findings, presented by the Finance Division during the launch of the SABRE+ digital platform, lay bare a systemic vulnerability that can no longer be ignored.

The issue is not confined to a few mismanaged institutions; the analysis of 101 entities reveals a total debt burden of Tk 639,782.58 crore, much of it tied to complex subsidiary loan agreements.

These arrangements, while designed to facilitate government borrowing and public investment, now risk becoming liabilities that future budgets may be forced to absorb.

This situation poses a dual threat: on one hand, it endangers the sustainability of vital public services; on the other, it risks placing an enormous fiscal burden on the state, potentially requiring large-scale bailouts. Left unchecked, this could divert funds from development priorities and social services, undermining economic resilience and public trust.

The launch of SABRE+, integrated with the government’s iBAS++ financial management system, is a welcome step toward improved oversight. Greater transparency and real-time monitoring are essential to understanding the economic health of public entities.

However, data alone is not enough. What is now needed is decisive action: comprehensive reforms in financial governance, enhanced accountability for mismanagement, and a reassessment of the viability of chronically underperforming institutions.

Moreover, the government must take a firm stance on debt restructuring and ensure that future lending to state-owned bodies is tied to clear performance benchmarks and fiscal discipline.

Without such measures, the risks identified in this report could escalate into a full-blown public finance crisis.

Bangladesh’s public sector cannot afford to operate in the shadows of unsustainable debt. We urge the authority to act immediately before liabilities overwhelm the state and compromise the country’s economic future.