The government plans to enhance the domestic debt market by increasing its share of marketable securities over the coming years. 

This strategy, outlined in a recent Finance Ministry document, includes a commitment to the ongoing issuance of Islamic securities Sukuks while putting Eurobond issuances on hold.

The document indicates significant fiscal deficits projected for the upcoming years. 

For the fiscal year 2025 (FY25), the deficit is expected to reach Tk 2.792 trillion, and for FY26, it is anticipated to rise to Tk 3.170 trillion, each constituting 5.0% of GDP. This underscores the urgent need for strategic domestic borrowing to bridge these gaps.

The government aims to minimize borrowing costs by prioritizing traditional external creditors. The strategy involves collecting Tk 1.20 trillion from external sources in FY25 and Tk 1.30 trillion in FY26, each making up 2.1% of GDP. 

However, domestic sources will play a more substantial role, with planned collections of Tk 1.67 trillion and Tk 1.86 trillion for FY25 and FY26, respectively, representing 2.9% of GDP.

The banking sector is expected to be a significant contributor, with anticipated contributions of Tk 1.38 trillion in FY25 and Tk 1.54 trillion in FY26. The non-banking sectors are projected to contribute Tk 292.8 billion and Tk 317.1 billion, respectively. 

Additionally, savings certificates are expected to add Tk 191.4 billion in FY25 and Tk 190.3 billion in FY26, while other sources are projected to contribute over Tk 100 billion annually.

The government maintains a prudent deficit financing policy to avoid debt distress, keeping the deficit steady at around 5.0% of GDP. The country’s debt level has remained stable at approximately 33% of GDP in recent years. 

In the medium-term outlook, the government expects domestic borrowing to remain stable at 2.9% of GDP. Reliance on marketable securities will increase nominally, with a planned reduction in higher-cost National Savings Certificate instruments, which will gradually decrease their contribution to the financing mix.

External financing is projected to increase nominally between FY24 and FY26, driven by greater disbursement for large projects and increased budget support. This increase is contingent on the pace of project implementation. 

Bangladesh has received considerable budget support from external sources in recent years, and this trend is expected to continue in the medium term.