Bangladesh’s foreign debt servicing rose 17 percent to $7.09 billion in the last fiscal year, consuming nearly three-quarters of the total foreign grants and loans received during the period.

Data from the Economic Relations Division (ERD) show that the repayment bill accounted for about 76 percent of the $9.3 billion Bangladesh received in external financing in FY2024–25. Of the total servicing amount, $5.0 billion was paid as principal, including $2.6 billion in state-guaranteed loans taken by public sector agencies. Interest payments stood at $2.08 billion.

A significant portion of the repayment included $1.41 billion paid to clear crude oil import bills, according to ERD figures.

Foreign debt servicing costs have been rising steadily over the past several years. The government repaid $6.08 billion in FY24, nearly double the $3.3 billion paid in FY21. Debt servicing crossed the $1 billion mark for the first time in FY13.

At the end of FY25, Bangladesh’s total foreign debt stock reached $87.3 billion, of which $77.28 billion was government debt and the remainder government-guaranteed borrowing by public agencies. The debt stock increased by around 12 percent year-on-year.

External debt accounted for 18.99 percent of gross domestic product, remaining well below the 40 percent risk threshold used by international lenders.

Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development (InM), said the rise in repayments reflects the expiry of grace periods for several foreign loans, many of which have now entered their principal repayment phase.

He noted that a growing share of Bangladesh’s borrowing consists of relatively hard loans with higher interest rates and shorter grace periods. Large-scale infrastructure borrowing by the previous government, continued borrowing in recent years, and budgetary support during the Covid-19 recovery have all contributed to the rising debt burden.

Citing World Bank classifications, the ERD maintained that Bangladesh remains a “less indebted” country, as all key debt indicators are still below critical thresholds.