The government's debt is projected to gradually increase over the next two fiscal years, following the trend of the previous two years.
The projected debt will stand at 37.6 per cent and 38.5 per cent of the GDP in the 2024-25 and 2025-26 fiscal years, respectively, according to an official document of the Ministry of Finance, reports UNB.
The debt amount is estimated at Tk 21,18,000 crore for FY25, while for FY26, it is set to rise to Tk 24,38,800 crore. The figures were Tk 18,32,900 crore which was 36.6 per cent of GDP and Tk 15,69,700 crore which was 35.1 per cent of GDP for FY24 and FY23, respectively.
The domestic debt for FY25 is projected at Tk 13,07,100 crore or 23.2 per cent of GDP, constituting 61.7 per cent of the total debt. Meanwhile, external debt is expected to reach Tk 8,10,900 crore or 14.4 per cent of GDP, making up 38.3 per cent of the total.
For FY26, the domestic debt is forecasted at Tk 14,97,200 crore or 23.2 per cent of GDP, representing 61.7 per cent of the total debt. The external debt is anticipated to be Tk 8,10,900 crore or 14.4 per cent of GDP, making up 38.3 per cent of the total amount.
A finance ministry document says that an expansionary fiscal policy will persist in the medium term until FY25 to aid in recovering from the adverse effects of the Covid-19 pandemic.
As a result, the debt-GDP ratio is expected to rise from 32.4 per cent in FY2020-21 to 38.5 per cent in FY26.
Both domestic and external debt stocks, as a percentage of GDP, will continue to grow in the medium term. Notably, the external debt stock is projected to increase at a faster pace relative to domestic debt, according to the document.
By the end of FY26, the external debt stock is estimated to reach 14.8 per cent of GDP, making up 38.6 per cent of the total debt stock.
According to the finance ministry document, titled “Medium Term Macroeconomic Policy Statement (2023-24 to 2025-26)”, as of the end of FY2021-22, the debt portfolio in Bangladesh was primarily composed of domestic debt, which constituted 64 per cent of the total debt stock.
Marketable securities made up 50 per cent of the domestic debt, while National Savings Certificates (NSCs) contributed 43 per cent, with the remainder financed through the provident fund.
Recent years have seen a shift in the external debt stock's relative share, with more than two-thirds of external debt now being multilateral.
Despite this, new bilateral creditors have emerged, offering semi-concessional loans. Over the last 15 years, the total debt-to-GDP ratio in Bangladesh has never exceeded 40 per cent.
A notable development by the Finance Division is the exercise of a home-grown Debt Sustainability Analysis (DSA) using national data, marking a significant milestone for the country.
Previously, Bangladesh relied on DSAs conducted by the IMF and World Bank. The new analysis was based on the DSA-LIC template provided by the IMF and World Bank, with additional technical support from these institutions.
The findings demonstrate that the country's public debt is sustainable and well within safe thresholds, even in the face of extreme scenarios.
The report identifies areas for enhancing the country's debt management strategies and provides recommendations for future actions.
This enhanced transparency and accountability in public debt management are poised to bolster investors’ confidence in the financial system and foster long-term economic growth in Bangladesh.
