Debt rises fivefold in 15 years

Bangladesh’s government debt has surged nearly fivefold in 15 years to $204.9 billion, placing the country 45th among the world’s most indebted nations, as mounting global liabilities and rising borrowing costs put public finances under growing pressure.

According to data from the International Monetary Fund (IMF), Bangladesh’s total government debt stood at $40.9 billion in 2010 but has since climbed to $204.9 billion, equivalent to 40 per cent of its gross domestic product (GDP).

Although the country’s debt-to-GDP ratio remains relatively low compared with those of several major advanced economies, the sharp increase in outstanding debt highlights the importance of prudent borrowing, stronger revenue mobilisation and effective debt management to maintain fiscal stability.

The global trend offers a warning for Bangladesh and other developing economies. Governments worldwide are spending increasing amounts on interest payments, leaving less money available for essential public services, infrastructure and social protection.

Global debt, including government, household and private-sector liabilities, exceeded $365 trillion at the end of June 2026, according to the Institute of International Finance (IIF).

The total rose by $10 trillion in the first six months of the year, with much of the increase coming from emerging economies.

The IIF estimated the global debt burden at around $44,000 for every person worldwide, underscoring the scale of financial obligations confronting governments, businesses and households.

For Bangladesh, the central concern is not simply its position in the global debt rankings but whether the country’s expanding liabilities can be managed without placing excessive pressure on public expenditure and future economic growth.

The United States has the world’s largest government debt, at $41.4 trillion, equivalent to 127 per cent of GDP, according to IMF data. China ranks second with $22.5 trillion, or 104 per cent of GDP, while Japan is third with $8.7 trillion.

Japan has the highest debt-to-GDP ratio among major economies, at 199 per cent. The United Kingdom ranks fourth in total government debt, with $4.4 trillion, equivalent to 102 per cent of GDP.

France follows in fifth place with $4.2 trillion, or 118 per cent of GDP. Italy’s government debt stands at $3.7 trillion, equivalent to 138 per cent of GDP, while Germany owes $3.5 trillion, or 65 per cent of GDP. India ranks seventh, with $3.4 trillion in government debt, equivalent to 83 per cent of GDP.

Bangladesh’s debt-to-GDP ratio of 40 per cent is substantially lower than those of these major economies.

However, the rapid rise in its debt stock warrants attention, as a country’s ability to service its obligations depends not only on the amount borrowed but also on revenue generation, economic growth, borrowing terms and the returns generated by public investment.

The United States, for instance, benefits from issuing debt in the dollar, the world’s principal reserve currency.

Strong international demand for dollar-denominated assets helps sustain investor appetite for US government bonds. Developing economies such as Bangladesh do not enjoy the same advantages in international financial markets.

Governments commonly raise funds by issuing bonds, which investors purchase in return for interest payments and the repayment of principal at an agreed date.

Bond yields indicate the return investors demand for lending money and serve as an important measure of market confidence in a government’s ability to manage its debt. When bond prices fall, yields rise, making new borrowing more expensive.

Higher interest rates can gradually increase the cost of servicing existing debt as obligations mature and governments refinance them.

The resulting pressure can reduce the funds available for health, education, infrastructure and other development priorities.

For Bangladesh, the implications of rising global borrowing costs depend on the composition of its debt, the terms of individual loans, its refinancing requirements and its capacity to generate revenue.

A rising debt stock does not automatically mean a debt crisis, but higher servicing costs can narrow the government’s fiscal room if revenue and economic growth fail to keep pace.

Governments facing mounting interest bills may have to raise taxes, curb spending or increase borrowing to meet their obligations.

These choices can affect households and businesses through public-service reductions, changes in taxation and wider financial-market conditions.

The pressure of debt servicing has become particularly visible in France, where public borrowing costs have reached their highest level since 2002.

The country’s 10-year government bond yield has climbed to around 5 per cent, compared with 3.41 per cent for Germany. France is also paying more than Italy and Greece, while only the United Kingdom currently borrows at a higher rate outside the eurozone.

According to the IMF, France’s government debt could reach 121.8 per cent of GDP by 2030, making efforts to restore sustainable public finances more difficult.

The financial strain has coincided with widespread protests across France, Belgium, Italy and Portugal over the cost of living, low wages, housing shortages and budget constraints affecting schools and universities.

France’s interior ministry reported that more than 550,000 people demonstrated across the country last Saturday. Some protests have been accompanied by clashes, looting and arson.

Demonstrators have argued that rising interest payments are contributing to cuts in essential public services, including schools, hospitals and pensions.

The situation recalls the eurozone debt crisis of 2010-2012, when countries including Greece, Italy and Spain faced borrowing costs of 5 per cent or more. Ireland and Portugal sought international bailouts after their borrowing rates rose above 7 per cent.

The burden of servicing debt has become enormous even in advanced economies. Over the past year, they spent more than $3.3 trillion on interest payments on government bonds, exceeding global military expenditure of $3.1 trillion.

The interest bill was also higher than spending on artificial intelligence, estimated at $2.6 trillion, and clean energy, at $2.3 trillion.

The comparison illustrates the opportunity cost of debt: money spent servicing existing obligations cannot be used for other priorities unless governments raise additional revenue or borrow further.

Higher government borrowing costs can also influence interest rates across financial markets, potentially increasing the cost of mortgages, car loans and credit-card borrowing.

For Bangladesh, the challenge is to ensure that public borrowing supports productive investment and economic capacity while keeping repayment obligations manageable.

Maintaining a sustainable debt trajectory will require careful assessment of borrowing costs, stronger revenue mobilisation and effective use of borrowed funds.

With global debt continuing to rise and interest payments absorbing an increasing share of public resources, the country’s relatively modest debt-to-GDP ratio offers some perspective-but not a reason for complacency.