The outstanding stock of government guarantees fell by more than 5.0 per cent to Tk 1.015 trillion as of March 31, 2026, from Tk 1.070 trillion three months earlier, as repayments outpaced the issuance of new guarantees, according to the Finance Division.
The decline is attributed to both repayments against existing guaranteed loans and a limited number of new guarantees issued over the past two years, according to people familiar with the matter.
Of the total outstanding guarantees at the end of March, external guarantees accounted for Tk 534.17 billion and domestic guarantees Tk 480.79 billion.
The government, through the Finance Division, provides sovereign guarantees to domestic financial institutions including Bangladesh Bank as well as foreign financial institutions including foreign banks against loans or other financing facilities extended to government agencies and state-owned enterprises.
Such guarantees expose the government to contingent liabilities because the state may ultimately have to repay the money if the guaranteed entities fail to service their obligations.
The guarantees have primarily been extended to entities operating in strategic and infrastructure-related sectors, including power generation, mineral production and supply, fertiliser manufacturing and state-owned enterprises such as Biman Bangladesh Airlines and the Trading Corporation of Bangladesh (TCB).
At the end of December 2025, the government's outstanding guarantee stock stood at Tk 1.0697 trillion. Of this, Tk 583.83 billion was externally sourced and Tk 485.90 billion from domestic sources.
People familiar with the matter said the issuance of new guarantees had remained limited during the last interim-government period and during the period of transition to the new government following the last national election.
They said the relatively low volume of new guarantees over the past two years, combined with repayments against existing guaranteed loans, had helped reduce the overall stock.
The decline in guarantees could ease the government's contingent-liability exposure in the short term, although the fiscal risk remains depending on the financial health of the entities whose borrowings are backed by sovereign guarantees.
The government therefore needs to monitor the repayment capacity of guaranteed entities closely, particularly state-owned enterprises and companies operating in capital-intensive sectors, where financial difficulties could eventually translate into direct fiscal obligations.
