In its first year in power, the government led by Muhammad Yunus has taken nearly $4 billion in foreign loans to cover operational expenses, including salaries of government officials and employees. Economists and analysts say using foreign loans for operational spending instead of development projects is a concerning example of economic mismanagement.
The information was revealed in a report by the Economic Relations Division (ERD). The matter was highlighted in a report broadcast by a private television channel on Sunday (March 8).
According to the report, the government borrowed around $9 billion in foreign loans during the 2024โ25 fiscal year. Of this amount, about $4 billion was used to meet operational expenses, with a significant portion spent on paying salaries of government employees.
Analysts note that foreign loans are generally taken to finance development projects, infrastructure, and long-term economic growth. However, the fact that a large share of the borrowed funds has been used for general government services rather than direct development activities has raised concerns.
The report also mentioned that since independence, Bangladesh has taken foreign loans as budget support on several occasions. The total amount of such assistance now stands at around $14.5 billion. Notably, about $4 billion of that amount was borrowed during the tenure of the current government.
According to official data, as of June 30, 2025, Bangladeshโs total external debt stood at approximately $77 billion, which is about 19 percent of the countryโs Gross Domestic Product (GDP).
Although this ratio is not considered immediately risky, the World Bank has recently advised the country to remain cautious. Analysts have also emphasized the need for careful debt management and strategic economic planning to avoid the risk of falling into a debt trap.
In this regard, M Masrur Reaz, Chairman of Policy Exchange Bangladesh, said that the government had taken a relatively conservative stance in the Annual Development Programme (ADP) during that period.
โAs a result, a large portion of the more than $9 billion in loans received came in the form of budget support,โ he said.
He added that Bangladesh entered into budget support agreements with the World Bank and the Asian Development Bank, which allowed the country to receive about $4โ5 billion in disbursements during that fiscal year.
According to him, the decision was not solely due to a shortage of government funds; another key objective was to stabilize the countryโs foreign exchange reserves more quickly.
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