Finance and Planning Minister Amir Khosru Mahmud Chowdhury on Sunday said the real challenge facing Bangladesh was not the size of its debt but weak revenue, stressing that debt sustainability must begin with tax reform and borrowing that pays for itself.

"What matters is not how much was borrowed, but how well the borrowed money has been put to use," the minister said.

Speaking at the International Debt Conference Bangladesh 2026 in Cox's Bazar, he said macroeconomic stability had returned to the country after the interim period, with budget financing from Bangladesh Bank halted, reserves recovering and borrowing costs falling.

Organised by the Finance Division and the Asian Development Bank (ADB), the two-day event is the country's first international conference on sovereign debt management.

Experts from the World Bank, the IMF and the ADB, along with specialists from the United States, the United Kingdom, Malaysia, Indonesia, Pakistan and Sri Lanka, are taking part.

Discussions will cover borrowing in a high-interest-rate world, the local bond market, Sukuk, private investment, debt risk assessment, the Debt Management Office (DMO), and new instruments such as green bonds and Eurobonds.

The conference aims to produce practical recommendations to help Bangladesh become a trillion-dollar economy by 2034 and achieve a smooth graduation from the least developed country (LDC) category in 2029.

Describing the position in August 2024, the minister cited official figures as of  June 30, 2024, the last before the change of government on 5 August.

He said Public debt stood at Tk 18.89 lakh crore (about $163 billion), or 36 per cent of GDP.

“It had risen by Tk 5.4 lakh crore in two years from Tk 13.44 lakh crore on 30 June 2022. Total external debt, public and private combined, was about $104 billion, up from around $23.5 billion in 2009,” he said.

He said the government's borrowing from Bangladesh Bank had soared from Tk 730 crore on June 30, 2022 to Tk 56,750 crore on June 30, 2024. This had fuelled inflation of nearly 10 per cent.

He mentioned that Interest payments exceeded Tk 1 lakh crore in FY2023-24, while interest on external debt rose 3.5 times between FY2021-22 and FY2023-24.

“External debt servicing, covering principal and interest, reached $3.4 billion in FY2023-24.”

He said Reserves, calculated under the IMF's BPM6 method, fell from $48 billion in August 2021 to about $20.5 billion on July 2024.

About Tk 40,000 crore in power and fertiliser subsidies and roughly $2.5 billion in fuel import dues were left unpaid, he added.

He also said the banking sector was fragile and burdened with high default loans.

The minister said government borrowing from Bangladesh Bank had fallen to Tk 482 crore by 30 June 2026.

Reserves rose to more than $30 billion in June 2026 under the BPM6 method.

The interest rate on 91-day Treasury bills dropped from around 12 per cent in June 2025 to below 10 per cent in June 2026, and now stands between 8 and 9 per cent.

The government is increasingly relying on long-term bonds and Sukuk to minimise repayment risk, he said.

He cited greater transparency in debt management through the publication of a Debt Report, modernisation of the Primary Dealer system, and the inclusion of Bangladesh's local bonds in the J.P. Morgan GBI-EM index.

He cautioned, however, that repayment of past debt had begun.

External debt servicing will reach $4.5 billion in FY2025-26 and peak at about $5.5 billion in FY2029-30, he added.

Describing revenue mobilisation as the most important debt reform, the minister said the government would widen the tax net, cut unjustified exemptions and digitalise VAT and income tax systems.

Other measures included are reform of the banking sector and financial markets, including recapitalisation of state-owned banks, prioritising concessional loans and avoiding costly short-term borrowing, with no resort to printing money for budget financing, publication of the first Annual Borrowing Plan and a new Medium-Term Debt Strategy (MTDS), Financing only well-appraised, high-return projects and completing ongoing ones on a priority basis, deepening the local bond market by attracting pension funds, insurance companies and foreign investors, Clearing subsidy arrears, capping and charging fees on government guarantees, and publishing a guarantee list and a Fiscal Risk Statement and Forming a unified DMO and enacting a modern Public Debt Act.

He said the government's focus areas included accessing global capital markets at an opportune time through USD Eurobonds, Sukuk, Samurai and Panda bonds.

It also plans to open the capital market to foreign investors by utilising the J.P. Morgan GBI-EM index and linking settlement with Euroclear and Clearstream, and to strengthen links between banks and the capital market.

"Large, long-term investment finance will have to come from the capital market, not from banks alone," he said.

He added that Sukuk and green and blue bonds would be expanded, while international bonds would be issued only at an appropriate time.