Interim govt takes loans to meet operating expenses for first time in four decades

The interim government has taken loans in the 2024–25 fiscal year to run its regular operations — the first such move in four decades. The borrowing was used to pay salaries of officials and employees, settle routine bills and keep state activities functioning.

The information came at an event organised by the Citizens’ Platform for SDGs, Bangladesh on Thursday (February 19), where the current economic reality, existing challenges and future policy directions were discussed in detail.

Additional Research Director of the Centre for Policy Dialogue (CPD), Towfiqul Islam Khan, said the interim government had to borrow Tk 23,742 crore in FY2024–25 solely to cover operating expenses.

He said Bangladesh has reached a point where regular operating costs can no longer be met from its own revenue — a situation comparable to the 1980s during the rule of General Hussain Muhammad Ershad. Weak revenue mobilisation, economic instability and sluggish investment have undermined the country’s fiscal base, he added. The burden of unpaid liabilities from the previous government has also created extra pressure on the interim administration.

Echoing the concern, platform convener and CPD Distinguished Fellow Dr Debapriya Bhattacharya said the interim government had to take on a heavy debt burden despite cutting development spending and adopting austerity measures. The key reasons are slower-than-expected revenue growth and outstanding liabilities of the previous government, he noted.

According to the paper, although government income has slightly increased, regular expenditure has grown much faster. In FY2024–25, revenue receipts reached Tk 4.36 lakh crore, up 6.4 percent year-on-year. However, operating expenditure rose by 15.5 percent to Tk 4.59 lakh crore.

The gap between revenue target and actual collection — the revenue shortfall — has exceeded Tk 1 lakh crore and is projected to persist in FY2025–26. Rising debt repayment pressure is further complicating the situation. In FY2024–25, foreign debt servicing increased by 37.4 percent to Tk 30,835 crore. According to full budget estimates, the overall deficit has reached Tk 60,294 crore — nearly triple the Tk 21,684 crore recorded in FY2023–24.