Senior policymakers and economists have issued stark warnings about Bangladesh’s rising debt burden, cautioning that the country is heading toward - and may have already entered - a dangerous debt trap unless urgent reforms are undertaken. Speaking at a seminar in Dhaka, National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan made the most direct admission yet: “We have already fallen into a debt trap; unless we acknowledge this truth, we cannot move forward.”
The seminar was held at the National Economic Council (NEC) conference room in Sher-e-Bangla Nagar to launch the “Bangladesh State of the Economy 2025” and the “SDG Progress Report 2025”, prepared by the General Economics Division (GED) of the Planning Commission.
The event was attended by key government leaders, including Anisuzzaman Chowdhury, Special Assistant on Economic Affairs to the Chief Adviser, who was the chief guest. Bangladesh Bank Governor Ahsan H. Mansur, Chief Adviser’s Press Secretary Shafiqul Alam, and other top policymakers were also present. Former World Bank Lead Economist Dr. Zahid Hussain, former Dhaka University professor Mahbub Ullah, and CPD Honorary Fellow Dr. Mostafizur Rahman participated as discussants.
Economists Warn: ‘Bangladesh Is Moving Toward a Serious Debt Trap’: Economists and researchers expressed deep concerns over the deterioration of fiscal discipline, rising interest payments, and stagnant revenue collection - all of which are fueling fears of a looming debt crisis.
CPD’s Mostafizur Rahman warned that Bangladesh could “fall into a severe debt trap” if necessary reforms and financial discipline are not enforced. According to him, the government is increasingly borrowing just to service existing debts - a textbook indicator of debt distress. He noted that expenditure priorities have shifted dramatically in recent years. “Traditionally, the largest components of the revenue budget were salaries and pensions for government employees, followed by agriculture and education. Now, interest payments have surpassed these critical sectors,” he said, pointing to an alarming trend in fiscal management.
NBR Chairman: Revenue Collection Has Collapsed: NBR Chairman Md Abdur Rahman Khan delivered one of the strongest warnings of the day. “We have already fallen into a debt trap. Unless we acknowledge this truth, we cannot move forward.” He highlighted the steep decline in Bangladesh’s tax-to-GDP ratio - from above 10 percent a few years ago to just around 7 percent today. “This decline reflects a structural weakness. The key problem is that we cannot collect revenue from all sectors of GDP,” he said, stressing that substantial reforms are needed to widen the tax net and improve compliance.
He also disclosed that under the interim government, the NBR will soon be divided into two divisions, each led by a separate secretary, to strengthen tax administration and modernize revenue operations.
Bangladesh Bank: Five Troubled Banks Merger Advancing Fast: Bangladesh Bank Governor Ahsan Mansur briefed the audience on the government’s ongoing efforts to stabilize the fragile banking sector. He confirmed that the merger process involving five distressed banks is progressing rapidly, and that the deposit guarantee has been doubled from Tk 100,000 to Tk 200,000. “Within one to two weeks, the process of compensating depositors will begin,” he said. This move is expected to benefit 76 lakh (7.6 million) families, offering protection to small depositors caught in the ongoing banking crisis. Mansur added that the newly merged bank could achieve profitability within its first or second year - a projection that many experts say will depend on governance reforms and tighter regulatory oversight. Experts Say Debt Trap Already Affecting Development Priorities: Speakers at the seminar argued that the government is already spending more on debt servicing than on crucial sectors such as agriculture and education - a clear sign of mounting debt stress.
Dr. Zahid Hussain noted that the fiscal deficit is expanding at a faster rate than revenue, increasing dependence on high-cost domestic and external borrowing. Professor Mahbub Ullah warned that unless institutional weaknesses, leakages, and tax evasion are addressed, Bangladesh’s fiscal crisis will deepen further.
Planning Commission Highlights Alarming Trends: GED’s Additional Secretary Monira Begum, who presented the keynote, outlined several structural vulnerabilities: Rising expenditure on interest payments. Weak tax administration and declining tax-GDP ratio. Increased reliance on foreign loans. Slow progress in meeting SDGs due to resource constraints. Pressure on social sectors as borrowing intensifies. She emphasized that without comprehensive reforms, Bangladesh’s long-term development goals may face setbacks. A Call for Fiscal Discipline and Structural Reform: Speakers urged the government to adopt a two-pronged approach: boost revenue collection and tighten fiscal discipline. Recommendations included: Expanding the tax net and enforcing compliance, Reducing wastage and corruption in public expenditure. Strengthening the banking sector through mergers and improved oversight. Prioritizing productive sectors rather than debt servicing. Implementing long-delayed administrative and financial reforms.
The rare public admission by NBR Chairman Abdur Rahman Khan that Bangladesh is already trapped in a cycle of debt marks a critical moment in the national economic discourse. Coupled with warnings from top economists and policymakers, the message is clear: without urgent reforms in revenue collection, expenditure management, and banking governance, Bangladesh’s fiscal vulnerability may escalate into a full-blown financial crisis.
