External liabilities reach $78.22b

Bangladesh is facing growing challenges in managing its external debt as access to highly concessional foreign loans declines and repayment obligations continue to rise. Against this backdrop, Finance Minister Amir Khosru Mahmud Chowdhury has revealed that the country’s total external debt stood at $78.22 billion as of March this year, warning that debt servicing pressures are set to increase further in the coming years.

The minister disclosed the information during a question-and-answer session in Parliament on Tuesday in response to a written query from Jamaalpur-3 lawmaker Mostafizur Rahman Babul.

According to Khosru, 61.97 per cent of the country’s external debt consists of concessional loans, while the remaining 38.03 per cent comprises non-concessional borrowing.

Highlighting the challenges of external debt management, the finance minister said Bangladesh’s access to highly concessional financing has gradually diminished since its graduation from a low-income country to lower-middle-income status, as recognised by the World Bank in 2015.

At the same time, he noted that foreign borrowing has increased substantially over the years to support development activities, resulting in a growing burden of principal repayments and interest payments in the future.

To address these challenges, the government has adopted a number of measures aimed at ensuring sustainable debt management and minimising risks.

“Proposals for new foreign loans and related development projects are being scrutinised more rigorously to avoid financing unnecessary or low-priority projects through high-interest external borrowing,” Khosru told Parliament.

He said only projects with strong economic returns are now being considered for foreign financing.
The minister also noted that monitoring of foreign-funded projects has been strengthened to reduce delays and cost overruns, long-standing issues that have increased project costs and financing requirements.

In addition, the government is updating its Medium-Term Debt Management Strategy (MTDS) and conducting a Debt Sustainability Analysis (DSA) to reinforce the resilience and sustainability of public debt management.

Khosru further informed lawmakers that work will soon begin on broader institutional and legal reforms designed to improve the efficiency, transparency and overall effectiveness of the country’s debt management framework.

The initiatives, he said, are intended to help Bangladesh manage its rising external liabilities prudently while maintaining fiscal stability and supporting long-term economic growth.