News Desk
Bangladesh will face a significant increase in external debt repayments between 2026 and 2035, creating sustained pressure on government revenue and foreign exchange reserves. Estimates show that the country must repay $26 billion during the five fiscal years from 2026 to 2030, a level that marks one of the highest repayment cycles in its history.
Bangladesh has repaid $40 billion in external debt since independence. In contrast, it will repay nearly two‑thirds of that amount in only the next five years. Total external debt stood at $77 billion as of June 2025, equal to 19% of national income, and the ratio continues to rise. The debt‑servicing‑to‑revenue ratio is 16.5%, close to the International Monetary Fund’s 18% risk threshold.
Repayments will increase further in the following decade. Between 2026 and 2035, Bangladesh will need to repay $51 billion, double the amount due in the next five years. Annual repayments will peak at $5.5 billion in 2030. Remittances currently average about $2 billion per month, meaning three months of remittance income would be required to cover the peak repayment year. If current trends continue, Bangladesh may need until 2063 to clear its existing external debt.
Several global shocks have contributed to the rising burden. The Ukraine war, the Covid‑19 pandemic, and the Israel‑Palestine conflict have reduced exports, foreign direct investment, and remittance inflows. Recent instability in the Middle East and a global economic slowdown have further weakened Bangladesh’s external earnings and repayment capacity.
Domestic factors have also intensified the pressure. Large infrastructure projects financed through foreign loans have increased obligations. These include the $11 billion Ruppur Nuclear Power Project, the Karnaphuli Tunnel, the Padma Rail Link, and the third terminal of Shahjalal International Airport. Delays have raised project costs and postponed expected revenue. The Ruppur project alone will require $500 million in annual repayments by 2028. The Japan‑funded airport terminal, costing $2 billion, is still not operational.
Bangladesh’s narrow tax base is another structural weakness. The tax‑to‑GDP ratio remains around 7%, one of the lowest in the region. Heavy reliance on indirect taxes limits revenue growth during economic slowdowns. Weak tax collection forces the government to depend on external borrowing.
Higher import costs, driven by global price volatility, have strained foreign exchange reserves. At the same time, declining exports and remittances have reduced foreign currency inflows. Changes in lending terms by bilateral and multilateral partners — including higher interest rates, shorter repayment periods, and reduced grace periods — have added further pressure.
Analysts outline several measures to stabilise the situation. Increasing direct tax revenue is essential for long‑term fiscal sustainability. Export diversification is necessary to reduce vulnerability to external shocks. Import rationalisation, with a clear distinction between essential and non‑essential goods, can help protect reserves. Policies to increase remittance inflows are also important.
Experts also call for stricter project selection and stronger oversight. They urge the government to avoid prestige‑driven mega‑projects and prioritise domestic financing where possible. They emphasise the need to enforce project timelines and ensure that loan‑financed projects generate timely economic returns.
Bangladesh must strengthen capacity in four areas to manage rising repayments: export expansion, skilled workforce development, investment climate improvement, and tax revenue mobilisation. Maintaining a strong repayment record is critical as the country prepares to transition from least developed country status to developing nation status. Observers warn that any move toward default or restructuring would damage Bangladesh’s credibility in the global economic system.
