The interim government borrowed Tk1.68 lakh crore from domestic sources over 18 months, taking total outstanding domestic debt to Tk10.94 lakh crore by January 2026, up from Tk9.26 lakh crore in August 2024, Bangladesh Bank data showed.
The increase represents a rise of about 18.14 per cent during the period.
Borrowing was driven mainly by the banking system, with net bank borrowing reaching Tk64,924 crore during July to January of FY26.
The amount is more than four times higher than Tk15,532 crore borrowed from banks in the same seven-month period of the previous fiscal year.
Outstanding debt owed to the banking system stood at Tk6.11 lakh crore by the end of January.
In contrast, borrowing from non-banking sources slowed, with Tk7,724 crore raised during the period, down from Tk24,612 crore in the same period a year earlier.
Outstanding debt from non-banking channels stood at Tk4.83 lakh crore as of January.
Total net domestic borrowing from all sources reached Tk72,648 crore in the first seven months of the fiscal year.
Monthly data showed net bank borrowing of Tk11,538 crore in January alone.
The increase followed gross bank borrowing of Tk22,197 crore and repayments totalling Tk10,659 crore during the month.
The government also made a net repayment of Tk1,137 crore to non-banking sources in January.
Dhaka University Economics Professor Rumana Huque said revenue shortfalls typically drive government borrowing.
“When a government borrows, it usually signals that revenue is falling short of expenditure,” she said.
“That gap should be the primary concern, with stronger focus on improving revenue mobilisation rather than relying on debt,” she said.
She said domestic borrowing carries opportunity costs, as it can crowd out private sector credit by absorbing available funds.
“It is equally important to assess how the funds are used, whether they are invested in productive sectors or spent inefficiently,” she said.
She added that avoiding borrowing altogether is unrealistic, as development projects and essential public spending would stall.
“The real question, therefore, is not whether the government should borrow, but how efficiently and sustainably it does so,” she said.
