Bangladesh’s external debt rise sharply in 2025 as the government relied heavily on foreign borrowing to finance its budget and development spending.
Data from Bangladesh Bank show that the country added $9.87 billion in external liabilities within a year, reaching $113.51 billion in December 2025, up from $103.64 billion a year earlier.
The debt stock also edged up from $112.21 billion in the previous quarter, indicating a steady upward trend rather than a one-off increase.
The surge has been driven mainly by public sector borrowing.
Government external debt rose to $93.46 billion in December 2025 from $84.21 billion a year earlier.
Private sector external debt also increased, though at a slower pace, reaching $20 billion from $19.42 billion over the same period.
Officials said that the government borrowed more than $5 billion from development partners by mid-2025, which significantly lifted the overall debt level.
Such borrowing typically funds infrastructure and budget support, but it also raises future repayment obligations.
At the same time, short-term external financing by businesses showed signs of contraction.
Buyers’ credit — a form of foreign loan used to finance imports — declined to $4.23 billion in December 2025 from $5.22 billion a year earlier.
This suggests that private firms have reduced reliance on external trade credit, possibly due to tighter global financial conditions and weaker import demand.
Economists said that Bangladesh’s growing external debt reflects a long-term pattern that began over a decade ago.
The country’s foreign debt stood at $23.5 billion in 2009 but crossed $100 billion by 2023, largely due to large infrastructure projects financed through external loans.
Many of these projects faced delays, cost overruns and weak returns, limiting their ability to generate foreign currency earnings needed for repayment.
As a result, debt has accumulated faster than the economy’s capacity to service it.
The rising debt has also increased pressure on repayment.
Government data showed that external debt servicing rose 17 per cent to $7.09 billion by June 2025. This amount absorbed about 76 per cent of the total foreign loans and grants received during the fiscal year, indicating a narrowing margin for new spending.
Higher reliance on non-concessional loans — which carry higher interest rates and shorter repayment periods — has added to the risk.
Since these loans are denominated in foreign currencies, any depreciation of the taka increases the cost of repayment in local currency terms.
The burden is also visible at the individual level. Per capita external debt rose to $654.9 by September 2025, more than double the level recorded less than a decade ago.
Economists warned that the current trajectory could strain fiscal management. Rising repayment obligations may limit the government’s ability to spend on social services and development, while also increasing vulnerability to external shocks.
They said a careful review of borrowing strategies is needed, with greater focus on project selection, cost control and ensuring that foreign-funded projects generate adequate economic returns.
