Govt borrowed to run routine operations after 40 years in FY25
For the first time in four decades, Bangladesh’s government had to borrow money simply to run its regular affairs -- paying salaries, servicing routine bills and keeping the machinery of the state in motion during the last fiscal year 2024-25 (FY25).
That strain was laid bare in a keynote paper on macroeconomic benchmarks of the country, presented today at an event organised by the Citizen’s Platform for SDGs, a civil-society watchdog.
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In FY25, the interim government had to borrow Tk 23,742 crore merely to meet recurrent operating expenses, said Towfiqul Islam Khan, additional research director of Centre for Policy Dialogue (CPD), while presenting the paper.
Khan said, “Bangladesh is now in a position where it cannot meet the recurrent operating expenditure with domestic mobilisation. It happened in the 1980s when General Hussein Muhammad Ershad ruled the country.”
Apart from weak revenue mobilisation, he noted that economic instability and sluggish investment had conspired to erode the state’s financial footing.
Besides, he noted, “The interim government has also faced additional pressure from clearing outstanding liabilities left by the previous administration.”
Also speaking at the event, Debapriya Bhattacharya, the platform's convenor and a distinguished fellow at CPD, concurred.
He noted that despite cutting development spending and pursuing austerity, the interim government has left the country's debt burden larger than it found it. “Mainly because revenue collection did not grow at the expected pace and outstanding liabilities from the previous administration had to be settled.”
Data from the keynote paper shows that while the government’s income grew modestly, its routine expenses expanded more than twice as fast. The result was a gap that could not be bridged without taking on debt.
Revenue receipts rose to Tk 4.36 lakh crore in FY25, up from Tk 4.09 lakh crore the year before, a gain of 6.4 percent. But recurring operating expenditure galloped ahead at 15.5 percent, reaching Tk 4.59 lakh crore.
The broader revenue shortfall -- the difference between total projected revenue and what was actually collected -- exceeded Tk 1 lakh crore in FY25 and is projected to do so again in FY26, according to the paper.
The situation is compounded by a ballooning debt-repayment bill. Foreign debt payments surged by 37.4 percent to Tk 30,835 crore in FY25, sharply up from 28.3 percent growth the previous year.
Counting the full budget, including development spending and foreign debt servicing, the overall deficit reached Tk 60,294 crore, nearly three times the Tk 21,684 crore recorded in FY24.
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