BD’s total debt rises 13.5pc to Tk 21.44tn in FY25
Business Report :
Bangladesh’s total debt rose by more than 13.5 per cent to Tk 21.44 trillion in the fiscal year ending June 2025, largely due to an increase in external borrowing, according to new data released by the Finance Division on Friday. The debt now stands at 38.61 per cent of the country’s GDPup 2.31 percentage points from the previous year.
Despite the rise, the Finance Division says the situation remains within a safe zone, as the debt-to-GDP ratio is still well below the International Monetary Fund’s 55 per cent threshold for low-income countries.
External debt saw a steep increase of 17 per cent to Tk 9.49 trillion as of June 2025, fuelled primarily by loans received under the IMF-supported programme. Bangladesh has so far received $3.50 billion out of the approved $4.55 billion. Domestic debt, meanwhile, rose 11 per cent to Tk 11.95 trillion.
Domestic borrowing continues to dominate the government’s debt portfolio. As of June 30, domestic liabilities accounted for 56 per cent of total debt, with external liabilities making up the remaining 44 per cent. The banking sector provided around 65 per cent of domestic financing, followed by National Savings Certificates (NSCs) at 28 per cent, and the General Provident Fund (GPF) covering the rest.
The Finance Division noted that ongoing reforms in NSC schemes are helping ease fiscal pressure and contributing to a more balanced debt structure. Borrowing from non-bank sources, mainly NSCs, declined by over Tk 60 billion during FY25.
However, interest expenses continue to rise sharply up 17 per cent from the previous fiscal year. The cost of treasury securities increased by 43 per cent year-on-year, while external interest payments rose by 21 per cent. The Finance Division warned that managing interest costs is now crucial for maintaining fiscal discipline, protecting foreign exchange reserves, ensuring economic stability, and safeguarding Bangladesh’s international credit rating.
To ensure long-term debt sustainability, the report stresses the need for stronger debt management, better project evaluation, higher implementation efficiency, enhanced domestic resource mobilisation, and greater efforts to diversify exports.
Despite rising interest costs earlier in the year, yield curves showed a slight drop in the cost of government borrowing during the fourth quarter of FY25 compared with the same period a year earlier.
The World Bank’s International Development Association (IDA) remains Bangladesh’s largest external lender, followed by the Asian Development Bank (ADB), Japan, and Russia. The external debt portfolio is diversified to reduce foreign exchange risks, with the US dollar making up around 52 per cent of the outstanding debt, and the rest spread across the yen, euro and Chinese renminbi.