B Mirror Report: The government’s total outstanding debt reached Tk 21.49 trillion at the end of the first quarter of the current fiscal year, posting a marginal increase of less than one per cent compared to June 2025, according to figures released by the Ministry of Finance.

Although the quarter-on-quarter rise remained moderate, year-on-year data indicate growing fiscal strain, largely driven by a sharp increase in foreign borrowing.

During the July–September period of fiscal year 2025–26, the government’s net borrowing from both domestic and overseas sources stood at Tk 50.10 billion  a significant jump from Tk 2.5 billion in the same quarter of the previous year. Officials said the surge underscores the state’s increasing dependence on debt to meet budgetary requirements.

Sources at the Finance Division noted that external loans accounted for most of the growth. Net foreign borrowing amounted to Tk 26.88 billion in the first quarter, compared with Tk 2.84 billion a year earlier, as per the quarterly public debt report of the finance ministry.

The World Bank’s International Development Association (IDA) remains Bangladesh’s largest foreign lender, followed by the Asian Development Bank, Japan and Russia.

As of September 30, 2025, domestic debt represented 55 per cent of the total public debt stock, while external obligations made up 45 per cent, highlighting the continued dominance of local financing despite rising overseas loans.

On the domestic front, borrowing from the banking sector declined notably. The government took Tk 28.20 billion from banks during the quarter, down from Tk 49.52 billion in the same period last fiscal year.

Meanwhile, non-bank borrowing turned negative, with nearly Tk 5.0 billion repaid over the three months. In contrast, sales of National Savings Certificates (NSCs) increased sharply, generating Tk 19.45 billion in net funds, compared with a net repayment of Tk 8.45 billion a year earlier.

Alongside rising debt, interest expenses also surged. During the first quarter of FY26, government interest payments climbed by 27 per cent to Tk 316.29 billion from the corresponding period last year.

Economists noted that stronger NSC sales suggest households are seeking safer investment options amid persistent inflation and economic uncertainty. They also warned that growing interest obligations could squeeze funds for development projects unless revenue collection improves or borrowing costs are managed more effectively.