The growth of government debt is continuing to outpace its revenue base, widening the structural gap between accumulated liabilities and the state’s annual resource mobilization capacity, according to Bangladesh Bank’s latest Systemic Risk Report for July–December 2025.
The central bank highlighted that while the government debt-to-GDP ratio increased modestly, the debt-to-revenue ratio rose significantly due to a faster accumulation of public debt relative to national revenue generation. Both Bangladesh Bank and the International Monetary Fund (IMF) flagged low revenue mobilization and escalating domestic debt as critical vulnerabilities affecting the country’s long-term debt-servicing capacity.
The central bank’s report emphasized that aggregate government debt—comprising both domestic and external obligations—remained substantially higher than annual revenue throughout the FY21–FY25 period. The debt-to-revenue ratio reflects a growing debt servicing burden relative to the actual financial resources mobilized by the state.
This widening gap coincides with a deteriorating tax performance. According to the IMF’s latest Debt Sustainability Analysis, tax collection dropped to 6.8 percent of GDP in FY25 (down from 7.4 percent in FY24). The IMF attributed this slump to structural bottlenecks, including a narrow tax net, low compliance, and administrative inefficiencies, warning that unchecked reliance on domestic borrowings could further constrain future development expenditure.
