Bangladesh's total external debt stood at $78.22 billion as of March 2025, Finance Minister Amir Khosru Mahmud Chowdhury informed parliament, cautioning that the country's debt-servicing obligations are set to increase in the years ahead. The disclosure, reported by Dhaka-based The Business Standard, underscores mounting fiscal pressure on an economy navigating a tightening external financing environment.

Debt Composition and Concessional Access

Of the total external debt, 61.97 per cent is concessional in nature, while the remaining 38.03 per cent is non-concessional. The minister noted that Bangladesh's access to highly concessional financing has narrowed considerably since the country graduated from low-income to lower-middle-income status, according to a World Bank assessment. This structural shift means Dhaka must increasingly rely on costlier borrowing to fund development needs.

Government's Debt Management Measures

Finance Minister Chowdhury outlined several precautionary steps the administration has taken to ensure sustainable debt management. 'Proposals for new foreign loans and related development projects are being scrutinised more rigorously to avoid financing unnecessary or low-priority projects through high-interest external borrowing,' he was quoted as saying. The government is reportedly considering only projects with high economic returns for foreign financing. Monitoring of foreign-funded projects has also been strengthened to curb the long-standing problem of project delays and cost overruns.

Additionally, the government is updating its Medium-Term Debt Management Strategy (MTDS) and conducting a Debt Sustainability Analysis (DSA) to reinforce the resilience of public debt management over the medium term.

Broader Fiscal Pressures

The debt disclosure comes against a backdrop of wider fiscal stress. The National Board of Revenue has been assigned a collection target of approximately Tk 6 lakh crore, but analysts have warned that substantial shortfalls have been recurring. The government has proposed a budget of roughly Tk 9.3 lakh crore and projected a fiscal deficit of around Tk 2.43 lakh crore, equivalent to approximately 3.7 per cent of GDP. Notably, reports earlier this month suggested that estimated losses from corruption, overpricing, and systemic inefficiency could possibly exceed the country's budget deficit — a claim that, if accurate, would compound the debt-servicing challenge significantly.

What This Means Going Forward

The growing volume of foreign borrowing will increase future principal and interest repayment burdens, the minister acknowledged. With concessional windows narrowing and non-concessional debt accounting for over a third of the total, Bangladesh faces a more expensive borrowing environment at precisely the moment its fiscal headroom is under pressure. Analysts will be watching whether the updated MTDS and DSA translate into tangible course corrections — or remain policy documents on paper.