Liabilities fall by Tk 160b as SoEs cut exposure

Government liabilities arising from guarantees and counter-guarantees issued for loans taken by state-owned enterprises (SoEs) have declined to just over Tk 1.03 trillion as of June 2026.
The latest development reflects substantial repayments by several public-sector entities and a slowdown in new government-backed borrowing.
According to official statistics, outstanding guaranteed liabilities stood at slightly above Tk 1.03 trillion in June 2026, around Tk 160 billion lower than a year earlier.
The guarantees are provided against loans secured by state-owned financial and non-financial enterprises to implement various public policies and development programmes.
Such commitments expose the government to fiscal risks, as the state is obliged to honour these liabilities if any SOE fails to meet its debt repayment obligations.

The power sector continues to account for the largest share of guaranteed liabilities, representing nearly 34 per cent of the total outstanding amount.
However, officials familiar with the matter told The Financial Express that liabilities in the sector have fallen significantly in recent years due to substantial repayments and the absence of major new government-backed borrowing.
Guaranteed liabilities under the Power Division declined by around 35 per cent to Tk 347.05 billion in June 2026, from Tk 530.71 billion a year earlier.
Similarly, liabilities related to the  state-owned Trading Corporation of Bangladesh (TCB) fell by more than half.
Outstanding guaranteed loans for TCB declined to Tk 23.54 billion from Tk 48.96 billion, as the agency repaid a significant portion of its borrowings.
The corporation typically takes loans when Open Market Sale (OMS) operations are expanded during periods of high inflation.
Among the entities that recorded an increase in guaranteed liabilities, the Bangladesh Agricultural Development Corporation (BADC) posted the largest rise.
Its guaranteed loans increased by Tk 41.55 billion, mainly due to financing requirements for fertiliser imports and the procurement of agricultural inputs.
Karmasangsthan Bank also recorded an increase in guaranteed liabilities, which rose by Tk 1.79 billion during the period.
Outstanding government-backed loans as of June 2026 include Tk 28.94 billion for agricultural credit, Tk 62.57 billion for Biman Bangladesh Airlines, Tk 67.86 billion for the energy sector, Tk 4.36 billion for telecommunications, Tk 347.05 billion for the power sector, Tk 73.65 billion for the Ghorashal-Polash Urea Fertiliser Project, Tk 87.55 billion for Bangladesh Chemical Industries Corporation (BCIC), Tk 39.60 billion for Bangladesh Sugar and Food Industries Corporation, Tk 2.85 billion for Bangladesh Jute Mills Corporation (BJMC), Tk 22.81 billion for Karmasangsthan Bank, Tk 23.54 billion for TCB, Tk 221.79 billion for BADC, and Tk 60.12 billion under miscellaneous categories.
A significant portion of these guaranteed liabilities relates to foreign loans obtained by the power sector and Biman Bangladesh Airlines from international lenders, including HSBC, the Export-Import Bank of China, the Japan Bank for International Cooperation (JBIC), the Export-Import Bank of India and the Bank of China.
Most of the remaining guaranteed loans were sourced from Bangladesh Bank and state-owned commercial banks.
Economists say that although the stock of guaranteed liabilities has declined, the government's exposure remains substantial.
They stressed the need for regular monitoring and risk assessment of state-owned enterprises to minimise potential fiscal shocks and safeguard public finances.
"There have been several instances where the government had to assume responsibility for SOE debts," said Dr Zahid Hussain, an independent economist.
He warned that contingent liabilities could quickly translate into direct budgetary pressures if the financial performance of state-owned enterprises deteriorates.
jasimharoon@yahoo.com