The country's foreign debt climbed to a record US$113.52 billion at the end of 2025, pushing the country into the IMF's 'moderate' debt risk category amid growing economic pressures and external uncertainties.
This combined public-and private-sector debt marks an increase from the previous July-September quarter, official data released on Wednesday showed, signalling a persistent upward trend in the nation's borrowing.
While the International Monetary Fund (IMF) had previously classified Bangladesh's debt risk as 'low', recent assessments have shifted it to 'moderate' due to rising debt-to-export ratios and constraints in revenue mobilisation.
The latest central bank data show a broad-based increase in borrowing across both public and private sectors during the final quarter of 2025.
This surge follows a brief period of stabilisation. At the end of the previous quarter in September 2025, total external debt stood slightly lower at $112.12 billion, according to Bangladesh Bank (BB) data released on Wednesday.
Public sector debt rose to $93.462 billion during the October-December quarter of 2025, up by $903 million from $92.559 billion in the previous July-September quarter.
Private sector debt also increased to $20.058 billion in the October-December quarter of 2025, $400 million higher than the $19.658 billion recorded in the preceding quarter, the BB data showed.
Within the public sector, the general government accounted for $80.941 billion in borrowing in the last quarter (October-December) of the calendar year, while other state-owned corporations such as Bangladesh Biman, BPC and BCIC borrowed $12.520 billion.
In the private sector, businesses took $10.187 billion in long-term loans and $9.871 billion in short-term loans, according to the central bank data.
The government remains the primary driver of external borrowing, largely to finance major infrastructure projects such as the Rooppur Nuclear Power Plant, metro rail and elevated expressways.
The rising debt comes at a precarious time, as Bangladesh's economy faces severe external shocks, most notably the ongoing Gulf crisis.
War-related disruptions in the Middle East have pushed global oil prices as high as $119 per barrel, significantly increasing Bangladesh's energy import bill.
Millions of Bangladeshi workers in the Gulf region constitute a critical financial lifeline for the country.
Analysts warn that a prolonged conflict in the Middle East could disrupt these remittance inflows, which are essential for maintaining foreign exchange reserves.
Major shipping lines have suspended cargo bookings between the Indian subcontinent and the Gulf, further straining the garment sector-the country's largest export earner.
Economists have expressed concern that the combination of mounting debt and regional instability could place unsustainable pressure on the national budget.
According to the Economic Relations Division (ERD), foreign debt repayments, including interest, are projected to reach $4.5 billion by the end of the current fiscal year (FY) 2025-26.
Grace periods for several mega projects are ending, which will "relentlessly" increase repayment obligations in the coming years.
While the IMF had earlier categorised Bangladesh's debt risk as "low", recent assessments have shifted it to "moderate" due to rising debt-to-export ratios and revenue mobilisation constraints.
The government now faces the difficult task of managing these repayment obligations while navigating an energy crisis and potential revenue shortfalls.
Experts suggest that boosting foreign exchange earnings through exports and ensuring that foreign-funded projects generate direct economic returns are essential to easing the growing debt pressure.
Economics Professor at the University of Chittagong, Dr Muinul Islam, told the FE that the "illusion" of mega projects under the previous Sheikh Hasina government has made Bangladesh more vulnerable to debt burdens.
"If borrowing continues to rise over the next four to five years and the Middle East crisis persists, Bangladesh could fall into a deep debt risk," he added.
The country could face serious difficulties if both the government and the private sector fail to use foreign loans prudently, the economist warned.
