A comprehensive overview of the external debt history of Bangladesh

Abeda Sultana ()

International Journal of Asian Social Science, 2025, vol. 15, issue 5, 54-69

Abstract: This paper presents a comprehensive analysis of Bangladesh’s external debt, utilizing secondary data spanning from the year of the country's independence in 1971 to 2023. The data sources for this analysis include reputable institutions such as the Ministry of Finance of Bangladesh, Bangladesh Bank (the central bank), and the World Bank’s World Development Indicators (WDI). The paper employs trend analysis, utilizing diverse tables, graphs, and computations conducted by the authors, to evaluate the determinants and patterns of external debt in Bangladesh. The findings reveal that both the budget and trade deficits have been consistently rising from the fiscal year 1972 to 2023, reflecting the growing economic challenges faced by the country. Although foreign aid continues to be an essential worldwide financial resource, Bangladesh has experienced a consistent reduction in foreign aid inflows as its economy has developed and matured over time. Despite this, the amount of external debt has continued to rise, with the country’s economy increasingly reliant on foreign loans to maintain internal and external balances, as well as secure foreign exchange reserves. To address these issues, the study recommends several measures to manage external debt more effectively, including restructuring debt repayment terms, diversifying the export base, and strengthening domestic revenue collection. The study’s findings and recommendations aim to assist policymakers in formulating strategies to utilize foreign debt more effectively, fostering long-term economic growth and stability for Bangladesh.

Keywords: Bangladesh; Budget deficit; Economic growth; External debt; Foreign aid; Trade deficit. (search for similar items in EconPapers)
Date: 2025
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