The government’s domestic debt has surged by more than Tk1.13 lakh crore within just 14 months of the interim administration, underscoring mounting fiscal pressure even as fresh borrowing from banks shows signs of slowing.
Latest Bangladesh Bank data show outstanding domestic debt climbed to Tk10,36,551 crore in October 2025, up from Tk9,24,000 crore in July 2024 when the Awami League government was still in office.
The increase of Tk1,12,550.6 crore represents a sharp 12.2 per cent rise over the period.
On a year-on-year basis, the upward momentum was already visible earlier, as domestic debt stood at Tk9,41,581.7 crore at the end of October 2024, marking roughly 10 per cent growth within a year.
Against this backdrop, the structure of the debt stock shows continued dependence on the banking system. Of the total outstanding amount, Tk5,48,914.6 crore came from banks while Tk4,87,636.0 crore was sourced from non-bank channels, reflecting the government’s heavy reliance on domestic financial institutions.
Economists say the sustainability of this trajectory will ultimately depend on the strength of revenue mobilisation.
“We need to look at the debt that we have accumulated in the last six to seven years,” economist M Masrur Reaz told the media. “For domestic debt, revenue collection is very important. Here, we need to pay attention to the debt-to-revenue ratio. If revenue does not increase, managing increasing domestic debt will become difficult.”
Echoing the concern from a banking perspective, Syed Mahbubur Rahman, Managing Director and CEO of Mutual Trust Bank, pointed to the maturity profile of non-bank borrowing. He noted that liabilities raised through instruments such as treasury bills and bonds can extend up to five years and therefore carry longer-term implications.
“Since debts from non-banking sources such as treasury bills can extend up to five years, they could have significant long-term implications,” he told the media, while stressing the need for stronger revenue mobilisation to ensure smooth repayment.
He, however, added a note of caution rather than alarm. “Domestic borrowing is fine as long as the government can pay the debt. However, a larger portion of the annual budget for debt repayment is not sustainable,” he said.
Even so, recent flow data suggest the pace of new borrowing has moderated. In the first four months of FY26, the government borrowed Tk14,820 crore, nearly three times lower than Tk39,218 crore in the same period a year earlier.
A similar cooling trend is visible in bank financing. Net bank borrowing during July to October FY26 stood at Tk2,885 crore, sharply down from Tk17,280 crore in the corresponding period of the previous fiscal year.
Looking more closely at the latest monthly movement, the government in October alone borrowed Tk12,981 crore from banks but repaid Tk3,437 crore, resulting in a net addition of Tk9,544 crore.
At the same time, mobilisation from National Savings Schemes has weakened. Net sales during July to October FY26 amounted to Tk2,370 crore, less than half of Tk5,108 crore recorded in the same period of FY25.
Meanwhile, the outstanding amount of Bangladesh Government Investment Sukuk reached Tk24,000 crore by the end of October, indicating the government’s continued push to diversify Shariah-based financing sources.
Taken together, the latest data point to a familiar but intensifying fiscal balancing act. Economists say the real test ahead will be whether revenue growth can keep pace with the steadily rising domestic debt burden.
Courtesy: Times of Bangladesh
