The projected allocation for the interest payment in the upcoming national budget is likely be Tk 1,42,000 crore -- a fourfold rise in a decade -- putting pressures on allocations for health and education.
Officials said that about Tk 1,15,000 crore would be put aside for the interest payment against the domestic borrowing and some Tk 27,000 crore for the external borrowing.
In 2016-2017, the government had to spend Tk 35,392 crore to pay the interest with Tk 33,551 crore for the domestic borrowing and Tk 1,842 crore for the external borrowing.
Finance and planning minister Amir Khosru Mahmud Chowdhury is expected to unveil the new national budget worth Tk 9,20,000 crore on June 11 in the Jatiya Sangsad.
The interest payment has been continuing to eat up a big slice of the national budget over the past half a decade because of borrowing sprees by previous governments, said the officials.
According to economists, the trend has further squeezed the fund flow to health and education sectors -- accounting for less than 1 per cent and 2 per cent of the GDP respectively.
Centre for Policy Dialogue distinguished fellow Mustafizur Rahman blamed chronic revenue shortfalls for the growing dependency on borrowing from both domestic and external sources to meet budget deficits.
The tax-to-GDP ratio fell below 7 per cent in 2024 from 9 per cent in 2014, one of the lowest in Asia and against the global average of 16.6 per cent.
The National Board Revenue has scarcely been successful in achieving its revenue collection targets because of the lack of automation and corruption, said the economist while highlighting the growing borrowing.
A significant portion of the government borrowing -- from TK 2,76,000 crore in 2009 to Tk 18,94,952 crore by September 2024 -- has been spent on politically motivated projects by the Awami League regime before being ousted in a mass uprising on August 5, 2024, he observed.
Over the next 18 months under the interim administration, the overall borrowing rose further to Tk 22,06,462 crore by December 2025 due to the same reason of revenue shortfall, according to the debt bulletin released by the Finance Division in the current month.
Two months later in February, the Bangladesh Nationalist Party-led government assumed power after winning the Jatiya Sangsad elections only to find the debt situation worrying amid price hikes of energy items in the global market because of the Persian Gulf war.
Without greater revenue earnings, the current debt situation will prevent the government from spending more for generating jobs and checking poverty, said economists.
Both unemployment and poverty have kept growing amid a slow economic growth, said former World Bank Dhaka office chief economist Zahid Hossain.
The country’s unemployment rate stood at 3.66 per cent in 2024, the highest in the past three years, according to the Labour Force Survey 2024.
In the FY 2024-25, the GDP growth rate stood at 3.49 per cent marking three consecutive years of economic deceleration and the weakest performance since the immediate recovery from the Covid-19 pandemic.
