Under the interim administration led by Muhammad Yunus, Bangladesh’s external debt has surged to a record level, reflecting continued reliance on overseas borrowing to support development spending and macroeconomic stability.
According to the latest figures published by Bangladesh Bank, the country’s total external debt stood at USD 113.51 billion at the end of December 2025—the highest level in its history. The data indicates a rapid upward trajectory in borrowing over the past year and a half, driven largely by public sector financing needs.
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Sharp quarterly increase
Between October and December 2025 alone, external debt rose by approximately USD 1.30 billion. In September 2025, the figure was USD 112.21 billion, highlighting a renewed acceleration in borrowing activity during the final quarter of the year.
Over a longer horizon, the increase becomes even more pronounced. At the time of the political transition on 5 August 2024, external debt stood at USD 103.41 billion. This means the country’s debt burden has expanded by roughly USD 10 billion within around 17 months, underscoring a structural dependence on external financing.
Breakdown of external debt
The composition of Bangladesh’s external liabilities shows that the public sector accounts for the overwhelming share of borrowing, while private sector debt has grown more modestly.
| Period | Total External Debt (USD billion) | Public Sector | Private Sector |
|---|---|---|---|
| Aug 2024 | 103.41 | Not specified | Not specified |
| Sep 2025 | 112.21 | 92.55 | 19.65 |
| Dec 2025 | 113.51 | 93.46 | 20.05 |
The table highlights a steady rise in government borrowing, reflecting increased reliance on external funds to finance infrastructure and budgetary requirements.
Drivers of rising debt
Economists attribute the upward trend to sustained public investment in large-scale infrastructure projects, budget deficit financing, and broader development needs. Over the past decade, Bangladesh has undertaken several capital-intensive initiatives, including metro rail systems, power plants, expressways, tunnels, airport expansion projects, and other strategic infrastructure developments, much of which has been funded through foreign loans.
This pattern has continued under the interim administration, with approximately USD 4 billion in new borrowing reportedly directed towards bridging fiscal gaps, meeting salary and welfare obligations, and stabilising the macroeconomic environment.
Economic implications and risks
Analysts caution that the more pressing concern is not only the size of the debt but also the growing repayment burden. With a significant portion of external loans entering repayment cycles in the coming years, pressure on foreign exchange reserves is expected to intensify.
If export earnings and remittance inflows do not grow in tandem with repayment obligations, maintaining external balance could become increasingly challenging. This could place strain on currency stability and overall macroeconomic resilience.
Outlook
While economists acknowledge that external borrowing remains essential for sustaining development momentum, they emphasise the importance of improving debt efficiency. Greater focus is being placed on directing borrowed funds towards productive sectors that generate export earnings and long-term growth.
Strengthening export competitiveness, enhancing remittance inflows, and ensuring prudent debt management are viewed as critical priorities. Overall, although the current debt level is not yet deemed unsustainable, experts warn that weak oversight or inefficient utilisation could heighten economic vulnerabilities in the medium to long term.