Bangladesh's Foreign Debt Nears $114 Billion, Almost Triple What It Owed a Decade Ago

Bangladesh's foreign debt has climbed to roughly $113.5 billion at the end of 2025, nearly three times the $38 billion it owed a decade earlier, according to Bangladesh Bank figures cited in the World Bank's latest International Debt Report. The pace of borrowing has alarmed economists, not because the debt itself is unusually large by global standards, but because of what it costs relative to how much the country actually earns from exports.

• Foreign debt reached about $113.5 billion at the end of 2025, up from roughly $38 billion in 2015, a near tripling in a decade.
• Debt servicing consumed 16 percent of export earnings in 2025, more than the South Asian average, even though that ratio fell 3.1 percentage points from the year before.
• External debt equals 210 percent of Bangladesh's annual exports, against 83 percent for India and a regional average of 95 percent.
• Government debt servicing is projected to jump from $4.9 billion to $7.6 billion a year by 2029.

A decade of borrowing, in one chart

The long view matters here more than any single year's number. Bangladesh's external debt stock has moved from around $27 billion in 2011 to about $38 billion in 2015, past $73 billion in 2020, past $95 billion by mid 2022, and now to roughly $113.5 billion by the end of 2025. Each of those jumps reflects a mix of budget support loans, infrastructure financing and, more recently, costlier commercial borrowing taken on tighter terms.

Two consecutive quarters show the climb has not stopped: external debt rose from $112.2 billion in the third quarter of 2025 to $113.5 billion in the fourth, Bangladesh Bank data show, a gain of roughly $1.3 billion in three months. Public sector debt, mostly government loans, makes up by far the largest share, at $93.5 billion.

Why the servicing ratio matters more than the total

A headline debt figure means little without knowing how much income is available to pay it down. On that measure, Bangladesh looks shakier than most of its neighbours. Debt servicing, meaning principal and interest payments due in a given year, took 16 percent of the country's export earnings in 2025. India's equivalent figure is about 10 percent, matching the wider South Asian average. External debt as a share of exports tells a similar story: Bangladesh's is 210 percent, more than double India's 83 percent and well above the regional average of 95 percent.

Government debt servicing alone came to $4.9 billion in the last fiscal year. Officials project that figure will rise to $7.6 billion a year by 2029, a jump of more than 50 percent, as loans taken on commercial terms over the past few years begin coming due.

How Bangladesh compares to its neighbours

Country	External debt, 2025	Change over 10 years
India	$764 billion	+59%
Bangladesh	$113 billion	Nearly tripled
Pakistan	$135 billion	Almost doubled
Sri Lanka	$57 billion	+31%
Nepal	$11 billion	+186.5%
Maldives	$4.7 billion	More than fourfold
Bhutan	$3.3 billion	+57%

Nepal and the Maldives have grown their debt stock faster in percentage terms, but both are starting from a much smaller base. Bangladesh's worry is less the growth rate itself and more that its export base has not grown fast enough to keep pace with what it now owes.

What economists are recommending

"Global financing conditions are tightening," said Professor Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue, who expects debt ratios to climb rapidly in the coming years unless loan terms improve.

Zahid Hussain, a former lead economist at the World Bank's Dhaka office, has gone further, warning that unchecked borrowing could push Bangladesh toward a situation resembling Sri Lanka's debt crisis if the trend continues unaddressed. Both economists point to the same underlying weakness: readymade garments still make up about 85 percent of Bangladesh's export earnings, and domestic value addition within that industry is only 60 to 65 percent, leaving little room to grow foreign currency income quickly enough to outrun the debt.

Their recommendations converge on three points: diversify exports beyond garments, raise domestic revenue collection so the government leans less on foreign loans to fund development spending, and negotiate longer grace periods and lower rates on new borrowing rather than accepting whatever commercial terms are on offer.

The bond alternative Bangladesh keeps circling back to

Part of the reason economists keep pushing bond issuance as an alternative to further concessional borrowing is that Bangladesh has spent much of the past year talking about, then shelving, then reviving plans for its first ever sovereign dollar bond. The idea resurfaces whenever reserves look comfortable and fades whenever market conditions turn, which is itself a sign of how little room Bangladesh currently has to borrow on its own terms rather than whatever a lender offers. A dollar bond, if priced reasonably, would let the government raise money without going through a bilateral or multilateral lender, but pricing one in a tightening global market, exactly the condition the CPD's Mustafizur Rahman flagged, could mean paying a steep coupon just to prove the country can access capital markets at all.

What it means for you

For most households, a rising national debt bill shows up indirectly, through a government that has less room to subsidise fuel and electricity, slower growth in public sector hiring, or a weaker taka if foreign currency reserves come under pressure to meet repayment schedules. For businesses that borrow or earn in dollars, it is worth tracking the exchange rate closely using the site's currency converter, since any strain on reserves tends to show up first in the dollar rate. None of this is a crisis today. Bangladesh's debt-to-GNI ratio of 24 percent is only slightly above the South Asian aggregate of 21 percent, and far from Sri Lanka's levels before its 2022 default, but the direction of travel, not the current snapshot, is what economists keep flagging.