Government debt crosses $204 billion, calls grow to end borrowing to feast

The materialist Charvak philosophy says: 'Rinam kritva ghritam pibet, yavat jivet sukham jivet' — borrow if you must, but drink ghee; live happily as long as you live. But in today's global economic situation, economists consider this doctrine quite dangerous. The world economy is in a mild downturn, and borrowing to feast today can become a terrible burden tomorrow — eat ghee on credit today, and tomorrow even two handfuls of rice to stave off hunger may become uncertain.

Sri Lanka and Pakistan are the great examples of what borrowing to feast leads to. Sri Lanka went bankrupt not long ago after borrowing to feast. Now, by adopting restraint and austerity, the country is turning around. Pakistan, meanwhile, has become a loan-defaulter state, floundering in a vicious cycle of debt.

The analysis says that during the Awami League's fifteen and a half years in power, Bangladesh sank into an ocean of debt. The interim government that followed the mass uprising of August 2024 carried the same system forward for a year and a half, and by taking fresh loans it pushed the economy into deeper crisis.

The Bangladesh government's domestic and foreign debt has recently crossed 204 billion dollars, which is more than 40 percent of GDP. In November 2026, the government's foreign debt stock stood at 116 billion dollars, more than 23 percent of total GDP.

According to the World Bank and the IMF, foreign debt becomes dangerous for a country when it crosses 40 percent of GDP. Judged by that standard, analysts believe Bangladesh is now close to the danger line.

In the 2026-27 fiscal year budget, the allocation for repaying debt principal and interest has nearly caught up with the allocation for education and technology, the budget's main sector. From the 2028-29 budget onwards, repaying government debt principal and interest may become the largest head of budget expenditure.

Then, like Pakistan, the Bangladesh government too will have to borrow more every year just to repay the principal and interest on its domestic and foreign debt. That is the 'debt trap', the analysis notes.

Realising this reality, Prime Minister Tarique Rahman adopted a policy of spending cuts and austerity after taking charge of running the country, the analysis says. The Prime Minister follows the principle that not a single taka from the state treasury may be spent unnecessarily, and he also tries to economise in his personal life.

But despite the Prime Minister's directives, the government has still not escaped the old debt cycle. The gap between government income and expenditure is steadily widening. Faced with a large revenue shortfall and the pressure of government spending, the government is borrowing more from the banking sector.

In the first four months of the current 2026-27 fiscal year alone, the government has borrowed a net 47,843 crore taka from the banking sector. That already uses about 43 percent of the bank-borrowing target set for the whole fiscal year.

Behind the growing dependence on debt, alongside weak revenue collection, the pressure of paying increased salaries and allowances to government officials and employees is also playing an important role. Economists believe the implementation of the new pay scale may raise the pressure of government spending further in the days ahead.

Government borrowing from banks is helping to meet the budget deficit and run regular expenditure on the one hand. On the other hand, prolonged over-dependence on bank borrowing risks shrinking the private sector's access to credit and investment opportunities. With industries and businesses demanding credit, heavy government borrowing from banks can strain the banks' lending capacity. The analysis adds, however, that alongside borrowing, the amount of old loans being repaid and the overall money supply in the market must also be taken into account.

In the present situation, the biggest challenge for the government is to raise revenue and set priorities in spending. If revenue collection does not improve as hoped, dependence on bank borrowing to meet the budget deficit may grow further, which could affect public finance as well as private investment and the overall economy.

The analysis says the current BNP government is not at all responsible for this situation. When it took charge, a debt burden of more than 23 lakh crore taka had been placed on the new government's shoulders. In 2025 as well, growth in government borrowing from banking sources was more than 32 percent.

Because of the global economic crisis and the situation in the Middle East, the energy sector has now become the centre of the economy. The analysis claims the current government is working tirelessly to overcome deep crises inherited from the previous government — the revenue deficit, disorder in the banking sector and the smuggling of dollars abroad. The government has taken some positive initiatives to improve the investment and business environment, but it will take more time for their benefits to be felt.

Prime Minister Tarique Rahman has urged reducing debt dependence since taking charge. The directives given by the government to that end include: reviving the private sector and reopening closed factories; preventing corruption and enforcing a zero-tolerance policy against it; and restoring discipline in the financial sector and ensuring transparency and accountability in banking. The analysis concludes that the country is now passing through a time of crisis. Walking the old path of debt dependence for a quick fix may bring some relief today, but it will only deepen the crisis. So there is no alternative to breaking out of the debt cycle — borrowing to feast must stop now.