For the first time, the International Monetary Fund (IMF) has set a limit on foreign borrowing by Bangladesh. According to the IMF, Bangladesh can take a maximum of $8.44 billion in foreign loans in the 2025–26 fiscal year.

This cap was disclosed in the Bangladesh Country Report published by the IMF after the disbursement of the fourth and fifth tranches (totaling $1.34 billion) of the approved loan in June. The borrowing limit is one of several new conditions that Bangladesh must meet to access the next tranche of IMF funding.

Under the new terms, the IMF has also set quarterly borrowing ceilings:

Q1: Up to $1.91 billion

First 6 months: Up to $3.34 billion

9 months: Up to $4.34 billion

Full fiscal year: Up to $8.44 billion

The IMF will closely monitor Bangladesh’s foreign loan status every three months.

When the IMF initially approved a $4.7 billion loan package in 2023, there was no such condition on foreign loan ceilings. However, with the approval of the fourth and fifth tranches, the total loan package increased by $800 million and the program’s duration was extended by six months. So far, Bangladesh has received $3.6 billion under the IMF program.

A senior official at the Finance Ministry said the borrowing limit was determined based on the IMF’s latest Debt Sustainability Analysis (DSA). The analysis has classified Bangladesh as a “medium risk” country for two consecutive fiscal years, up from its previous “low risk” status. This change is due to the increasing debt repayment pressure relative to exports and revenue.

According to the DSA, the debt-to-export ratio for FY 2023–24 stood at 162.7%, significantly higher than the projected 116–118%. The foreign debt-to-revenue ratio has also increased, reducing the country’s borrowing capacity.

During the tenure of the ousted Awami League government, foreign borrowing surged due to mega infrastructure projects and pandemic-related spending. A report by the Asian Development Bank (ADB) noted that over the last 13 years, Bangladesh’s foreign debt has more than tripled, marking the fastest growth in South Asia.

Government data shows that in FY 2009–10, Bangladesh’s foreign debt was $2.03 billion, which rose to $8.02 billion in FY 2024–25. However, officials in the current interim government say that the tendency to borrow has somewhat decreased compared to the past.