In a landmark shift, Bangladesh’s Finance Department has revised its debt accounting system-now categorizing Ways and Means Advances (WMA) and overdrafts (OD) provided by Bangladesh Bank as part of the internal government debt portfolio. This has led to an unprecedented Tk56,495 crore increase in internal debt for FY 2023-24. Key Numbers: Debt Revision in Detail: Under previous accounting, internal debt at end of FY 2023-24 stood at Tk 10,20,205 crore. After revision, it has surged to Tk10,76,700 crore-an additional Tk?56,495 crore.
For FY2022-23, internal debt was revised upward by Tk17,515 crore, from Tk9,44,335 crore to Tk9,61,850 crore. These revisions stem from bringing previously uncounted central bank advance facilities into the government’s debt ledger for greater transparency and accuracy. Why This Matters: Unveiling the Hidden Liabilities: Previously, WMAs and ODs-temporary advances to cover daily cash shortfalls-were not included in official debt metrics, masking the true size of government liabilities. The revised approach now aligns internal debt figures with international best practices, with support from the International Monetary Fund (IMF).As one Finance Department official explained, this adjustment ensures internal debt figures reflect all sources of borrowing from within the country, bringing overdue clarity to fiscal reporting and planning.How Bangladesh Bank Contributed: At the close of FY?2023?24:WMA outstanding: Tk?8,000 crore, Overdraft balance: Tk?48,745 crore, At end-FY?2022?23:WMA: Tk?8,000 crore, OD: Tk?9,802 crore. These figures-once off-book-are now formally absorbed into debt calculations, revealing a more accurate fiscal landscape.
Historical Debt Growth: A Sharp Trajectory Since 2018: Since independence in 1974, Bangladesh had borrowed a cumulative Tk?8,73,000 crore. However, in just five years post?2018, under Prime Minister Sheikh Hasina, the government added approximately Tk?10.5 lakh crore to the debt stock.By the time of her departure in August 2024, total debt had ballooned to nearly Tk?20 lakh crore, with interest payments consuming half of the government’s operating budget.The newly revised annual internal debt figures now expose only a fraction of how much government borrowing depended on central bank facilities.
Expert Insights: Why This Revision Is Critical: Dr. Zahid Hossain, former Chief Economist at the World Bank’s Dhaka office:”If advances from the central bank were not counted, the government’s debt was naturally underestimated. These revisions must also be applied retroactively across previous years-or at least clearly noted in the fiscal years where corrections occurred-for meaningful comparisons between years to be possible.”His view underscores the importance of transparency in public debt indicators.
Zahid Hussain, commenting on broader debt management:”Bangladesh needs an integrated debt office. Currently, responsibility is fragmented-foreign loans handled by ERD, domestic borrowing by Bangladesh Bank, and piecemeal analysis by Finance Division. A unified framework is essential for managing debt sustainably.” 
What Is WMA & Overdraft? Tools for Daily Cash Flow: “Ways and Means Advances” (WMA) and “Overdraft” facilities provide temporary liquidity support to the government for day-to-day expenses when revenues lag expenditures. These are not meant for financing budget deficits long-term, but serve as stopgap to manage cash mismatches. Traditionally limited to Tk?8,000 crore for each instrument, ceilings have occasionally been increased amid crisis. 
Why the Previous Accounting Undermined Fiscal Clarity: By excluding these central bank advances, debt statistics undervalued internal borrowings-giving a misleading impression of a healthier fiscal position. With government loans from Bangladesh Bank now fully included, analysts have a clearer picture of true liabilities, allowing for better debt management and policy planning.
Broader Fiscal Context: While these accounting revisions are key, Bangladesh’s overall debt trajectory remains concerning. As projected in the Medium-Term Macroeconomic Policy Statement (MTMPS FY26?FY28):Total debt is expected to reach 37.72% of GDP by FY?28, compared to 37.41% today.By FY?28, total debt may hit Tk?28.94 lakh crore, up from Tk?21.12 lakh crore in FY?25.About Tk?5 lakh crore of this increase will come from domestic sources; the rest from foreign debt.Interest payments are projected to rise significantly-from Tk?1,21,500 crore in FY?25 to Tk?1,52,500 crore by FY?28. 
IMF’s Role: Support & Conditions: The International Monetary Fund has backed the reform, including the debt accounting change. In May-June 2025, Bangladesh secured:US$884 million under ECF/EFF financing. US$453 million via the Resilience and Sustainability Fund (RSF). These funds come with conditions emphasizing fiscal transparency, revenue management, and overhaul of public debt reporting mechanisms. Full compliance is crucial to maintain access to further tranches. 
Risks & Policy Implications: Interest Burden: Elevated debt levels mean nearly half of government operating budget goes toward interest-crowding out essential public investment.Liquidity Stress: Heavy reliance on central bank advances signals ongoing cash-flow mismatches and revenue shortfalls.Financial Markets: WMAs and ODs now attract interest-WMA is tied to reverse repo rates; overdraft carries ~1% premium. Overuse raises inflationary risks. Fragmented Debt Oversight: Without institutional reform (like a unified debt office), reconciling fiscal data remains difficult.Public Confidence & Policy: Transparency boosts confidence, but rising internal debt may prompt concerns about fiscal discipline.
Road Ahead: Needed Reforms: To stabilize and manage the evolving debt profile, experts recommend:Institutionalizing a Debt Office: Centralize debt management under one agency to oversee both domestic & foreign borrowings. Full Historical Revision: Apply the revised accounting framework retroactively or clearly annotate historical data for more accurate year-on-year comparison.Enhanced Revenue Measures: With rising debt burdens, expanding tax revenue and curbing wasteful subsidies remain essential for fiscal sustainability.Ceiling Management & Clarity: Limit and clearly communicate usage of WMAs and overdrafts, and adjust ceilings based on budget scale-a practice historically neglected. Monetary Policy Discipline: Reduce reliance on central bank funding where possible; emphasize market-based borrowing instruments like treasury bonds.
Final Word: A Step Toward Transparency, But More Needs to Follow: The Finance Department’s move to reclassify central bank advances as internal debt is a significant step toward fiscal transparency. The Tk?56,495 crore debt hike-once hidden-now lays bare the government’s borrowing footprint.
While this reform brings clarity, the underlying debt trajectory remains steep. With total public debt projected to exceed Tk?28 lakh crore by FY?28 and interest payments rising, sustainable management demands structural reforms, institutional consolidation, and revenue enhancement.
As Bangladesh navigates complex economic waters-including political transition, compliance with IMF programs, and internal fiscal discipline-this accounting correction may be the first pivot toward responsible governance.But for long-term resilience, the government must build robust debt infrastructure, increase fiscal transparency, and ensure that debt data reflects reality-not illusions.