Total government debt stock rose over 5.4 per cent during the first nine months of the fiscal year 2025-26 to Tk 22.59 trillion, driven largely by increased domestic borrowing, particularly from the banking system.
According to finance ministry data, released Thursday, domestic debt climbed 8.41 per cent to Tk 12.954 trillion by the end of March from the level recorded at the beginning of the fiscal year, the report showed.
Borrowing from the banking system accounted for the largest share of domestic debts, rising nearly 14 per cent to Tk 8.82 trillion by the end of March, which reflects government's growing reliance on banks to finance its budget deficit.
In contrast, borrowing from nonbank sources, including National Savings Certificates (NSCs), declined 1.46 per cent to Tk 4.14 trillion during the period, suggesting weaker mobilisation from retail savings instruments.
External debt rose at a much slower pace, increasing 1.5 per cent to Tk 9.637 trillion as of March 2026 from July 2025.
The higher reliance on domestic borrowing also pushed up debt-servicing costs on account of principal and interest thereon.
In the meantime, total interest expenditure rose 29 per cent year on year in the first three quarters of FY2025-26.
Interest payments on domestic debts surged 34 per cent year on year to March 2026, driven by both higher borrowing volumes and elevated interest rates.
By comparison, interest payments on external debt increased by a modest 4.0 per cent year on year during the period ending March 2026.
