Bangladesh’s total external debt climbed 8.6% to $113.4 billion in 2025, according to the World Bank’s International Debt Report 2026, underscoring the country’s growing reliance on foreign financing at a time when developing economies face mounting debt-servicing pressures.
Despite the increase, Bangladesh maintained a relatively moderate external debt burden, with outstanding foreign liabilities equivalent to 24% of gross national income (GNI), while its debt service-to-exports ratio eased to 16%.
The report shows that long-term public and publicly guaranteed (PPG) external debt reached $89.5 billion, accounting for nearly four-fifths of the country’s total external obligations.
Multilateral creditors remained the largest source of public external financing, holding $51.1 billion in outstanding debt.
The World Bank’s International Development Association (IDA) accounted for $22.6 billion, followed by the Asian Development Bank (ADB) with $17.5 billion.
Bilateral creditors held another $32.6 billion, with Japan accounting for $12.7 billion and Russia $9 billion.
The remaining external liabilities included $9.9 billion in private nonguaranteed debt and $14.1 billion in short-term borrowing.
Debt burden remains relatively manageable
Although Bangladesh’s external debt stock continued to expand, several indicators suggested that the immediate burden remained within manageable levels.
The country’s external debt-to-GNI ratio stood at 24%, while the debt service-to-exports ratio declined to 16%, reflecting an improvement in the proportion of export earnings required to meet external debt obligations.
The terms of new official financing commitments also remained relatively favourable.
According to the World Bank, these commitments carried an average maturity of 25 years, a six-year grace period and an average interest rate of 3%.
Such financing conditions provide borrowers with longer repayment periods and lower borrowing costs than those generally available through international commercial markets.
However, the growing debt stock underscores the importance of maintaining export earnings, foreign exchange reserves and sustainable repayment capacity.
South Asia’s debt reaches $955bn
Bangladesh’s rising external debt comes amid a broader increase in borrowing across South Asia.
The region’s total external debt reached $955 billion in 2025, although its average debt-to-GNI ratio remained relatively contained at 21%.
Bangladesh’s ratio of 24% was slightly above the regional average, indicating a somewhat higher external debt burden relative to national income.
Despite relatively moderate debt ratios, South Asian economies face an increasingly challenging global financing environment, with higher borrowing costs and pressure on public finances.
Developing countries face mounting repayment pressure
Globally, total external debt across low- and middle-income countries rose 5.5% to a record $9.4 trillion in 2025, marking the sharpest annual increase in four years.
The rise followed renewed activity in international bond markets and increased lending by private creditors.
However, the improved access to financing came at a substantially higher cost for poorer economies.
Private creditors charged countries eligible for IDA financing an average interest rate of 8.2% on new commitments in 2025, the highest level since the late 1980s.
Meanwhile, total debt-service payments by low- and middle-income countries increased for the fifth consecutive year, reaching $1.4 trillion.
In some vulnerable economies, debt repayments consumed more than 40% of government revenue, limiting resources available for healthcare, education and infrastructure development.
World Bank Chief Statistician Haishan Fu warned that access to financing alone would not ensure sustainable development.
“We must know the debt, understand its terms, and ensure that the financing developing economies receive strengthens rather than constrains their ability to grow, withstand shocks, and improve the lives of their people,” she said.
World Bank analysts cautioned that developing economies were increasingly borrowing at higher costs, potentially reducing the resources available for long-term economic development.