The government's overall debt stock stood at Tk 21.49 trillion at the end of the first quarter (Q1) of the current fiscal year, up by less than 1.0 per cent from June 2025, according to data from the finance ministry.
While the quarter-to-quarter increase appears modest, the year-on-year growth points to mounting fiscal pressure driven largely by higher external borrowing.
During the July-September quarter of the 2025-26 fiscal year (FY), the government's net borrowing from both domestic and external sources amounted to Tk 50.10 billion, a steep rise from Tk 2.5 billion in the matching period a year earlier.
People familiar with the development at the Finance Division said the surge was primarily due to higher external borrowing.
Net borrowing from foreign sources reached Tk 26.88 billion during the first quarter compared to Tk 2.84 billion in the corresponding period of the previous fiscal year, according to the quarterly public debt report of the Ministry of Finance (MoF).
Bangladesh's largest external creditor remains the World Bank's concessional lending arm, the International Development Association (IDA), followed by the Asian Development Bank, Japan and Russia.
As of September 30, 2025, domestic liabilities accounted for 55 per cent of the government's total debt stock, while external liabilities made up the remaining 45 per cent.
The composition highlights the continued importance of the domestic market in public financing, even as external borrowing accelerates.
On the domestic side, the government's net borrowing from the banking system during the said quarter declined significantly over the corresponding quarter of last year.
Government borrowed Tk 28.20 billion from banks during the July-September of FY '26, down from Tk 49.52 billion in the same period of the previous fiscal year.
The volume of non-bank borrowing, however, turned negative, with the government repaying nearly Tk 5.0 billion during the quarter.
In contrast, the government's borrowing through National Savings Certificates (NSCs) rose sharply, reaching Tk 19.45 billion, compared with a net repayment of Tk 8.45 billion a year earlier.
However, the government's interest payments also increased markedly.
Up to the first quarter of FY '26, its interest payments rose by 27 per cent to Tk 316.29 billion over the matching period of the previous fiscal year.
Economists say higher NSC sales often reflect households' preference for risk-free returns during periods of economic uncertainty and stubbornly higher inflation.
They also say rising interest payments could limit fiscal space for development spending unless revenue collections improve or borrowing costs are contained.
jasimharoon@yahoo.com