In Bangladesh, government borrowing from the banking sector has witnessed a marked increase in recent months, raising concerns among economists and business leaders over fiscal sustainability and broader macroeconomic stability.
According to official central bank data, the government borrowed approximately 41,000 crore taka from the banking system within just one and a half months during the current administration led by the Bangladesh Nationalist Party (BNP). When combined with borrowing under the interim administration associated with Professor Muhammad Yunus, total bank borrowing over the last three months reached around 56,000 crore taka.
Overall, in the first nine months of the current financial year, total government borrowing from banks has climbed to nearly 109,000 crore taka, surpassing the full-year borrowing target. Analysts attribute this surge primarily to a widening gap between revenue collection and public expenditure requirements.
Data further indicate that over the past 14 months following the fall of the Sheikh Hasina government, net bank borrowing by the state has increased by nearly 175,000 crore taka, a figure close to 200,000 crore taka when rounded. Economists warn that such rapid accumulation of domestic debt could pose risks to financial stability if not managed carefully.
A combination of factors is contributing to the situation, including sluggish economic activity, weak private investment, and constrained employment generation. High inflation has also dampened consumer demand, further limiting revenue growth. During the first eight months of the fiscal year, the revenue shortfall reached approximately 71,000 crore taka, intensifying reliance on domestic borrowing to finance recurrent expenditure.
Despite these pressures, government spending has remained elevated. Additional external and geopolitical pressures, including tensions in the Middle East, have further increased fiscal burdens, prompting greater reliance on bank financing.
Government Borrowing Overview
| Period |
Estimated Bank Borrowing |
Notes |
| Last 1.5 months (BNP-led administration) |
41,000 crore taka |
Sharp short-term rise |
| Last 3 months (including interim administration) |
56,000 crore taka |
Accelerated borrowing phase |
| First 9 months of fiscal year |
109,000 crore taka |
Exceeds annual target |
| Last 14 months |
~175,000 crore taka |
Significant cumulative increase |
| First 8 months revenue shortfall |
71,000 crore taka |
Driven by weak revenue collection |
Economists have expressed concern about the long-term implications of this borrowing trend. Dr Mostafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD), cautioned that the economy must avoid falling into a debt trap. He emphasised that while short-term borrowing may be necessary to address energy and operational costs, the focus must shift towards strengthening revenue mobilisation and expanding the tax base.
Business leaders have echoed similar concerns. Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), warned that excessive reliance on bank borrowing could ultimately strain the national economy and create repayment pressures for the government in the future.
Taseen Ahmed, President of the Dhaka Chamber of Commerce and Industry (DCCI), highlighted ongoing liquidity constraints within the banking sector, noting that stricter loan classification rules have limited credit availability for private enterprises. He further pointed out that capital shortages in a significant number of banks are constraining their ability to extend fresh lending.
With borrowing continuing to accelerate, stakeholders are calling for urgent structural reforms in revenue collection and public expenditure management to ensure long-term fiscal sustainability.
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