Bangladesh’s foreign debt is rising rapidly. Between April and June of this year alone, external debt increased by nearly $7 billion. This entire increase occurred in the public sector, while in contrast, private sector debt slightly declined as repayments outpaced new borrowing.
As of the end of June, the country’s total outstanding foreign debt stood at over $112 billion, the highest in Bangladesh’s history. Of this amount, about $81 billion was accumulated during the 15.5 years of the Awami League government.
During this period, Bangladesh received new loans from international development partners such as the IMF, World Bank, ADB, JICA, and AIIB. While private sector borrowing decreased, many entrepreneurs are still turning to foreign loans with comparatively lower interest rates.
To tackle the dollar crisis, the previous government took measures such as controlling imports and increasing foreign borrowing. However, these steps were not enough to prevent a fall in foreign reserves. Since the interim government took office, reserves have stabilized, and the exchange rate has also normalized. According to central bank officials, this has largely been due to growth in remittance inflows and expected foreign loan disbursements.
Experts believe that although borrowing has helped stabilize the forex market, if the loans are not utilized properly, it could create repayment pressure in the future.
Dr. Zahid Hussain, former lead economist of the World Bank’s Dhaka office, told the media that most of the new loans are in the public sector. These are necessary for project implementation, he said, but if waste and inefficiency persist, the loans could become a burden for the country. Proper utilization, however, would help build repayment capacity.
He also noted that while the debt-to-GDP ratio remains within a manageable range, the debt servicing burden relative to foreign exchange earnings has significantly increased.
According to data from Bangladesh Bank, foreign debt at the end of June stood at $112.15 billion, which is $7.02 billion higher than in March. Six months earlier, in December, the total was $103.73 billion. However, there had been a slight decline in debt during the final quarter of 2024.
Government and public sector debt reached $92.37 billion by the end of June, increasing by nearly $7.5 billion over three months. On the other hand, private sector debt stood at $19.77 billion, decreasing by $110 million during the same period. While short-term borrowing slightly increased, overall private sector debt declined due to higher repayments of other loans.
A review of the data shows that at the end of 2006, under the four-party coalition government, foreign debt was under $19 billion. This rose to $21.19 billion during the two-year caretaker government. However, in the 15.5 years of Awami League rule, foreign debt has surged by more than $103 billion.
