Dhaka, Feb 23 (V7N)- Bangladesh’s economy is under mounting pressure due to record domestic and foreign debt, with the total liability now exceeding Tk 23 lakh crore, raising concerns about potential debt sustainability. Analysts warn that the new government will face challenges in managing this debt while maintaining economic stability.

Dr. Khandaker Golam Moazzem, director of the private research organization Center for Policy Dialogue, said that many loans taken for mega projects, infrastructure, and social sector development have not delivered the expected returns, adding to the debt burden.

The debt trajectory accelerated sharply during the 15-year tenure of the ousted Awami League government. When Sheikh Hasina came to power in 2009, total government debt was Tk 2.76 lakh crore, which surged to Tk 19 lakh crore by 2024. During the interim government after the July 2024 coup, borrowing exceeded Tk 4 lakh crore in a single fiscal year.

Former Chairman of the National Board of Revenue, Dr. Abdul Majid, noted that high debt repayments reduce the government’s spending capacity for public services such as education and health. He added that while loans are being used to cover arrears in the power and energy sectors and maintain foreign reserves, there is a growing deficit in revenue collection. In the first six months of the current fiscal year, Bangladesh faced a shortfall of Tk 65 thousand crore, compounded by weak export performance and inflationary pressure.

Dr. Moazzem also highlighted that borrowing costs for Bangladesh have risen, with concessional loans becoming less common. He stressed that the government must adopt a cautious approach in taking new loans to ensure debt sustainability.

According to reports, Bangladesh’s rating in the World Bank and International Monetary Fund debt sustainability report has shifted from the “low” category to “moderate,” reflecting the growing financial risks.

The government asserts that current borrowing is aimed at stabilizing the economy and addressing the residual challenges left by the previous administration, rather than for new development projects.

END/SMA/AJ