Bangladesh faces $23.24b foreign debt repayment pressure
Graphics: Agamir Somoy
Despite never defaulting on foreign debt, Bangladesh must repay $23.24 billion - Tk 2.88 lakh crore - over the next four years.
On average, $5.81 billion or Tk 72,000 crore will have to be repaid annually. An analysis of official government documents indicates that this debt repayment figure will reach $6.15 billion in 2030, creating significant economic pressure that economists fear.
State Minister of Planning Zonayed Abdur Rahim Saki told Agamir Somoy, “There is no scope to deny that the pressure of foreign debt is increasing. Although there is no formal government preparation regarding this, efforts are underway to increase the dollar supply so that there is no problem in debt repayment.
“Steps have been taken to prevent dollars from being laundered abroad. There are initiatives to increase remittance income. Along with that, dollars will also be increased by raising income through export diversification. As a result, there will not be much of a problem in repaying foreign debt.”
A meeting of the Executive Committee of the National Economic Council (ECNEC) took place on 16 September.
Prime Minister’s Finance and Planning Adviser Rashed Al Mahmud Titumir expressed concern over the growing pressure of foreign debt servicing. He said, “Most of the operating budget is spent on debt servicing. We know that debt repayment will increase significantly in 2027. For this reason, a comparative analysis between the rate of project cost increase and the rate of repayment increase is necessary.”
Economic Relations Division (ERD) Secretary Shahriar Kader Siddiky added, “According to project calculations, $5.48 billion will be needed for debt repayment in 2027. By 2030, the repayment amount will reach $6.15 billion. However, this may vary depending on fluctuations in exchange rates.”
According to ERD sources, an average of more than $50 million in foreign debt will need to be repaid in 2028, and nearly $58.1 million will have to be paid in 2029. Its latest data reveals that foreign debt repayment pressure has already begun to rise.
In the first two months (July-August) of the 2026-27 fiscal year, $698.9 million in foreign debt was repaid, comprising $516 million in principal and $182.8 million in interest. During the same time of the 2025-26 fiscal year, total repayment stood at $667.1 million, including $488.7 million in principal and $178.3 million or Tk 2,173.37 crore in interest.
A comparison between these two fiscal years shows that foreign debt repayment increased by $3.18 billion at the very start of the 2026-27 fiscal year, and insiders expect this figure to rise further as time progresses.
ERD calculations also highlight a stark contradiction: while debt servicing is going up, fund disbursements are falling. In the first two months of the 2026-27 fiscal year, development partner agencies and countries released $294.5 million across various projects, compared to $750 million during the same period last year, marking a decline of $455.5 million in comparative fund release.
Speaking to Agamir Somoy, Planning Secretary SM Shakil Akhter said, “In the past, we have never failed to pay any loan installment. Therefore, we hope that no problem will arise in the future either. Bangladesh remains below the foreign debt risk threshold set by the International Monetary Fund (IMF), meaning we have not entered the red zone yet, so there is no reason to panic. However, care must be taken to ensure that outcomes are generated from the projects for which loans are being taken, and the Planning Commission is conscious of this.”
Sources from the Planning Commission disclosed that in the Annual Development Program (ADP) for the 2026-27 fiscal year, an allocation of Tk 1.10 lakh crore in combined foreign loans and grants has been earmarked for 245 ongoing projects across 15 sectors.
A sector-wise breakdown reveals that 22 projects in the general public services sector have received a foreign loan allocation of Tk 1,739.96 crore, while the defense sector has no allocation. For public order and safety, 6 projects are allocated Tk 109.97 crore, whereas 10 projects in industrial and economic services have been allocated Tk 1,688.74 crore.
In agriculture, 22 projects have an allocation of Tk 3,225.09 crore. The electricity and energy sector received Tk 25,966 crore across 29 projects, and transport and communication were allocated Tk 27,654 crore for 47 projects.
In local government and rural development, 13 projects received Tk 3,460 crore, while 22 projects in environment, climate change, and water resources were allocated Tk 1,793 crore. Moreover, 33 projects in housing and community amenities were granted Tk 8,772 crore, 9 projects in health received Tk 2,117 crore, and 3 projects in religion, culture, and entertainment were allocated Tk 950 crore.
Also, 15 projects in education have been allocated Tk 4,418 crore, 5 projects in science and information technology were given Tk 452.61 crore, and 8 projects in social protection received Tk 566.64 crore.
The latest report by the Implementation Monitoring and Evaluation Division (IMED) indicates that spending from foreign loans under development projects dropped during the first two months of the 2026-27 fiscal year.
This slump is attributed to inefficiencies within ministries and divisions, lack of skill among project directors, bureaucracy of development partners, and land acquisition complexities. In July and August, ministries and divisions spent a mere 1.22 percent of their total allocation, down from 2.91 percent during the same period in the previous fiscal year.
Expenditure during the first two months was 3.10 percent in FY 2024-25, 3.58 percent in FY 2023-24, and 3.85 percent in FY 2022-23.
The International Monetary Fund (IMF) issued its first warning to Bangladesh regarding foreign borrowing in 2025. Based on its debt sustainability analysis, the IMF consistently identified the country as a medium-risk nation in FY 2022-23 and FY 2023-24. This signifies that the pressure of foreign debt repayment has grown relative to export earnings and revenue collection.
