Debate: Public debt in Bangladesh—how stressful is it for the government?

A fiscal imbalance occurs when a government’s expenditure exceeds its revenue, and this excess is typically borrowed from internal and external sources to achieve a budgetary balance, often through debt. Government debt can be stressful, particularly in terms of paying interest and repaying the principal. The government of Bangladesh has expressed its concern about the cumulative amount of public debt, which now stands at approximately $156 billion, comprising both domestic and external liabilities. This figure was $33.66 billion in 2008 (Daily Star, Citation2024). Further, external liabilities have doubled over the past seven years. Bangladesh’s government has substantial interest payments, which accounted for 11.2% for fiscal year (FY) 2020–21, 11.4% for FY2021–22, 11.9% for FY2022–23, 12.4% for FY2023–24, 14.2% for FY2024–25, and approximately 15.4% for FY2025–26 of the national budget. Interest payments are the second-largest item in public spending, after public services (23.6%), according to the sectoral allocation (MoF, Citation2025). Therefore, this debt burden is primarily linked to the previous government, which came into power after a landslide victory in 2008 and was forced to resign on 5 August 2024, amid widespread protests. The new interim government, which took office on 8 August 2024, succeeded the previous administration (Crawley, Citation2025).