In just 43 days after assuming power, the new government led by Tarique Rahman has borrowed approximately Tk 41,000 crore from the banking sector, raising serious concerns among economists and business leaders about growing fiscal pressure and policy continuity.
The surge in borrowing comes in the wake of the political transition following the fall of Sheikh Hasina in August 2024, after a mass uprising. Over the past 18 months since her governmentโs ouster, total government borrowing from banks has climbed to nearly Tk 2 lakh crore, according to central bank data.
Despite high public expectations that Nobel laureate economist Muhammad Yunus would stabilize the economy during the interim period, analysts say the situation has instead worsened. The interim administration, led by Yunus, is accused of failing to implement meaningful reforms while presiding over rising debt dependency.
In the last three months aloneโcovering the final phase of the interim government and the early tenure of the current administrationโgovernment borrowing from banks has reached around Tk 56,000 crore.
Economists point to a sharp decline in government revenue as a key driver behind the aggressive borrowing. In the first eight months of the current fiscal year, the revenue shortfall has surged to approximately Tk 71,500 crore.
At the same time, the government continues to face mounting expenditure pressures, including subsidies in energy and other sectors, as well as rising costs linked to global geopolitical tensions. High inflation has eroded consumer purchasing power, leading to reduced spending and further weakening revenue collection.
Business leaders warn that excessive government borrowing from banks is crowding out the private sector. With banks increasingly financing government deficits, access to credit for businesses is becoming more limited, potentially stifling investment and job creation.
Former BGMEA director Mohiuddin Rubel noted that expectations for structural reforms and economic recovery under the interim government were not met. โInvestment and exports have failed to reach expected levels, while a significant amount of money has reportedly been siphoned out of the country,โ he said.
Taskeen Ahmed, president of the Dhaka Chamber of Commerce and Industry (DCCI), described the governmentโs borrowing trend as sending โmixed signals.โ While increased borrowing may inject liquidity into the economy, it also raises risks of inflation, higher interest rates, and a rise in non-performing loans.
Economist Helal Ahmed Jony emphasized the importance of balancing debt with sustainable economic policies. โLoans must be repaid, and equal importance should be given to the private sector. Boosting domestic investment is crucial for job creation and for withstanding global economic pressures,โ he said.
The overall picture suggests that despite a change in leadership, there has been little shift in economic policy direction. Analysts warn that continued reliance on bank borrowing, without strengthening revenue collection and productive investment, could deepen long-term economic vulnerabilities.
As Bangladesh navigates a challenging economic landscape, experts stress that reducing debt dependency and restoring investor confidence will be critical to ensuring sustainable growth and stability.
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