Bangladesh's external debt increases almost threefold in decade

Bangladesh's foreign debt has more than doubled in just a decade, surpassing the debt levels of all other South Asian nations except the Maldives, according to the World Bank. Despite this, the country's debt burden remains relatively low compared to Pakistan, Sri Lanka, and Bhutan. However, it is higher than that of India and Nepal, with the World Bank's International Debt Report 2026 revealing Bangladesh's total foreign debt at $113 billion by the end of 2025, up from $38 billion in 2015.

For every $100 in annual earnings, Bangladesh carries $210 in total debt, paying back $16 annually. Economists assess these indicators as manageable for now, but there is concern about potential repayment difficulties if borrowing continues at the current pace and funds are not used effectively. In South Asia, India holds the largest external debt stock at $764 billion, up 59% over a decade, while Pakistan follows at $135 billion.

Sri Lanka's foreign loans increased by 31% to $57 billion, with Nepal and Bhutan seeing 186.5% and 57% rises, respectively, to $11 billion and $3.3 billion. The Maldives recorded a more than fourfold increase to $4.7 billion. Repayments consume 16% of Bangladesh's export earnings in 2025, slightly less than the previous year, though still higher than India's 10% and the South Asian average of 10%.

Measured against gross national income, servicing costs are low at 2%, matching India's and the regional benchmark, compared to 5% in Sri Lanka and 6% in Bhutan. The debt-to-GNI ratio, representing external debt as a percentage of national income, stands at 24%, manageable but slightly above the South Asian average of 21%. However, Bangladesh's debt-to-export ratio is a cause for concern, at 210%, more than twice what the country earns annually from exports, far above India's 83% and the South Asian average of 95%.

This heavy debt burden is largely due to Bangladesh's small export base, which is highly dependent on a single product category, putting the country at risk of becoming vulnerable to rising interest rates and shorter repayment periods on recent loans.