Bangladesh’s external debt rose to US$104,487 million in 2024, up from $101,371 million the previous year, driven by higher interest payments despite a slowdown in fresh disbursements, according to the World Bank’s International Debt Report 2025 published last week.

The country recorded net debt inflows of $5,769 million in 2024.

The long-term disbursements, however, decreased to $11,099 million, compared with $12,844 million in 2023, reflecting a tightening of external financing conditions.

Long-term interest payments showed a marked increase, reaching $2,443 million in 2024 from $1,721 million a year earlier. Interest payments on public and publicly guaranteed (PPG) long-term debt climbed to $1,899 million, up from $1,578 million in 2023.

The sharp rise underscores a growing repayment burden for Bangladesh as global borrowing costs remain elevated.

Bangladesh’s PPG external debt structure in 2024 remained heavily concentrated in official sources. Multilateral creditors accounted for 55% of the total, while bilateral creditors made up 37%, taking official exposure to 90%.

The World Bank noted that Bangladesh was among the largest recipients of combined IBRD-IDA lending during the year, reflecting continued dependence on concessional and semi-concessional financing.

The South Asia region’s external debt stock increased 8.4% to $896 billion in 2024. The World Bank identified South Asia as the region experiencing the fastest growth in PPG interest payments globally, with Bangladesh and Sri Lanka contributing significantly to the trend.

Bangladesh also accounted for close to 30% of all IDA-eligible debt stock, placing it among the top seven IDA borrowers worldwide, alongside Nigeria and Pakistan.

Compared with other South Asian countries, Bangladesh’s external debt ratios remain moderate but show emerging signs of stress. The country’s debt-to-GNI ratio stood at 22% in 2024—similar to Nepal’s 23% and slightly higher than India’s 19%.

In contrast, Maldives recorded a ratio of 76% and Sri Lanka 59%, indicating far higher levels of debt stress. Bangladesh’s debt service-to-exports ratio reached 16% in 2024, above India’s 10% and Nepal’s 12%, yet remained significantly lower than Sri Lanka’s 24% and Pakistan’s 40%.

The World Bank highlighted that reliance on official creditors is common among IDA-eligible economies, with Nepal at 90% and Bhutan at 98%. India stands in contrast, with 77.3% of its long-term external debt owed to private creditors, illustrating its broader access to international capital markets.

Despite comparatively moderate debt metrics, World Bank analysts say the rise in interest obligations and the slowdown in disbursements point to increasing external pressure for Bangladesh. With export earnings facing volatility, the growing cost of debt servicing may pose challenges to the country’s external stability in the coming years.

Local Experts Warn of Rising Debt Risk

On Monday, Prof Mustafizur Rahman, a distinguished fellow at CPD, warned at an event that Bangladesh could fall into a debt trap without swift measures.

“The country is currently on a risky path due to revenue shortfalls, repayment pressures, and policy weaknesses. The revenue-to-GDP ratio has fallen to 7.7% from 10.9% in 2015,” he said.

He highlighted severe inefficiencies in the tax system, noting that while consumers pay VAT on four lakh points, the government treasury only receives 24 thousand points, pointing directly to corruption.

“Without integrating income and expenditure data, tax evasion cannot be stopped,” he added.

Mustafiz also cautioned that interest payments have already become the second-largest expenditure in the revenue budget, pushing back sectors like agriculture and education. “If this trend continues, Bangladesh risks falling into a debt trap,” he said.

Meanwhile, NBR Chairman Md Abdur Rahman Khan acknowledged that the country is already in a debt trap.

“We cannot move forward without recognizing this reality. A few years ago, the tax-to-GDP ratio was above 10%, but it has now fallen to around 7%. A large portion of GDP is not being collected as tax,” he said.