Foreign Debt Hits Record High

Bangladesh’s external debt has surged to an unprecedented level during the tenure of the interim government led by Dr Muhammad Yunus, according to the latest figures released by the central bank. The data indicate that the country’s total foreign debt reached USD 113.51 billion at the end of December 2025, marking the highest level in its history.

The Bangladesh Bank statistics show that the debt stock increased by USD 1.30 billion in the final quarter of 2025 alone. In September 2025, the total stood at USD 112.21 billion, highlighting a steady upward trajectory over a short period.

A longer-term comparison underscores the scale of the rise. At the time of the political transition on 5 August 2024, total external debt was recorded at USD 103.41 billion. This means that within roughly one and a half years, the country’s foreign debt burden expanded by nearly USD 10 billion.

Debt Composition Overview

The central bank data further reveal that public sector borrowing remains the dominant driver of external liabilities. While private sector debt also rose, its contribution to overall growth was comparatively modest.

Between September and December 2025 alone, public sector debt rose from USD 92.55 billion to USD 93.46 billion, while private sector borrowing increased from USD 19.65 billion to USD 20.05 billion. This indicates that the state sector continues to account for the largest share of external obligations.

Economists attribute the sustained rise primarily to the financing needs of development expenditure and the pressure of managing fiscal deficits. Over the past decade, Bangladesh has relied heavily on foreign borrowing to fund large-scale infrastructure projects, including power plants, metro rail systems, expressways, tunnels, airport expansion, and the Rooppur nuclear power facility.

The trend has continued under the interim administration, which has reportedly contracted nearly USD 4 billion in new loans to address budgetary shortfalls, meet salary obligations, and stabilise macroeconomic pressures.

However, analysts warn that the growing stock of debt is less concerning than the rising burden of debt servicing. As repayment obligations accelerate in the coming years, pressure on foreign exchange reserves may intensify, particularly if export earnings and remittance inflows fail to grow in tandem.

Economists emphasise that while external financing remains essential for sustaining development momentum, the central challenge lies in ensuring efficient and productive use of borrowed funds. They also stress the importance of strengthening export competitiveness, boosting remittance inflows, and adopting a more cautious and risk-sensitive borrowing strategy.

Overall, experts suggest that the current debt level is not immediately destabilising. However, its long-term impact will depend heavily on how effectively it is managed—determining whether it becomes a catalyst for growth or a structural burden on the economy.