For the first time, the government’s cumulative domestic debt has crossed Tk 11.5 lakh crore. At the end of the 2025-26 fiscal year, the balance of this debt stood at Tk 11,53,635 crore. In a single year, the government’s domestic debt increased by nearly Tk 1,32,000 crore.
This information was revealed in a Bangladesh Bank report regarding the government’s domestic debt. According to the report, at the end of the 2024-25 fiscal year, the amount of the government’s cumulative domestic debt was Tk 10,22,000 crore.
In the last fiscal year, the government borrowed a total of Tk 1,31,904 crore from the banking system, financial institutions, and national savings certificates. The target for borrowing from domestic sources during that fiscal year was Tk 1,25,000 crore. This means that borrowing exceeded the target by Tk 6,904 crore.
Bank borrowing increased by Tk 54,000 crore
According to Bangladesh Bank data, in the last fiscal year, the government took a net loan of Tk 1,31,713 crore solely from the banking system. In the previous fiscal year, this loan amount was Tk 77,108 crore. Consequently, the government’s net borrowing from the banking system increased by Tk 54,605 crore in a single year.
On the other hand, the government’s net borrowing from non-bank financial institution sectors in the last fiscal year was only Tk 192 crore. In the previous fiscal year, the government had taken a net loan of Tk 42,259 crore from this sector.
In the budget for the last fiscal year, the government’s target for borrowing from the banking system was Tk 1,04,000 crore, while the borrowing target from non-bank financial institutions was Tk 21,000 crore.
Banks are the major source of domestic debt
At the end of the 2025-26 fiscal year, the balance of loans taken by the government from banks stood at approximately Tk 6,78,000 crore among its domestic debts. In a single year, the government’s cumulative bank debt increased by more than 24 percent.
The balance of loans taken from the non-bank financial institution sector stood at approximately Tk 4,76,000 crore. A major portion of the loans taken by the government from the banking system came through government treasury bills and bonds.
A review of Bangladesh Bank data shows that the banking sector has become the primary source of the government’s domestic debt. Previously, the government used to borrow large amounts through the sale of national savings certificates. However, this situation has changed over the past few years. Due to a decrease in the profits of savings certificates, people’s interest in investing in this sector has declined. As a result, the government has not been able to collect the expected amount of loans from savings certificates.
Domestic and foreign debt are almost equal
Meanwhile, the balance of the government’s foreign debt has also increased. According to another report by Bangladesh Bank, at the end of last March, the balance of the government’s foreign debt was 91 billion US dollars, or 9,100 crore dollars. At a rate of 125 taka per dollar, this amounts to more than Tk 11,37,000 crore in local currency.
However, the latest calculation of the government’s foreign debt at the end of last June has not been published yet. Consequently, it is not known what the balance of foreign debt became at the end of the 2025-26 fiscal year. Considering the data from March, the amounts of the government’s domestic and foreign debt are nearly equal.
Combining both domestic and foreign debt, the government’s total debt amounts to nearly Tk 23 lakh crore. Along with the increase in the amount of debt, the pressure to pay interest is also mounting.
Economists say that interest payments on debt have become one of the major expenditure sectors for the government. The government has to allocate a large amount of money in the budget to pay interest on both domestic and foreign debt. In the current budget for the 2026-27 fiscal year, Tk 1,27,500 crore has been allocated for paying debt interest.
They further state that the burden of domestic and foreign debt is continuously increasing, along with the mounting pressure of interest payments. Debt servicing has turned into the second largest expenditure sector for the government. A situation has been created where new loans have to be taken merely to repay existing debts. This is pushing the country toward a dangerous debt risk. Additionally, the interest on foreign debt is also rising. As the grace period for several large loans comes to an end, the pressure of interest payments may increase further in the future. To manage this pressure, they have advised placing the utmost importance on increasing revenue alongside reducing wastage in government expenditures.
