Bangladesh is at a moderate risk of external and overall debt distress, according to the Asian Development Bank (ADB). The ADB highlighted limited capacity to absorb shocks in the near term. Weak revenue mobilization and increasing domestic borrowing are adding fiscal pressures as the country prepares to graduate from least-developed-country status in November 2026, as reported by The Daily Star based in Bangladesh.
The ADB cautioned that Bangladesh’s graduation from LDC status could lead to reduced access to concessional financing and trade support measures. This situation would necessitate stronger domestic revenue mobilization and improved fiscal governance. In the fiscal year 2025, Bangladesh’s public debt had risen to about 41 percent of its gross domestic product (GDP).
With domestic debt making up 55.6 percent of the country’s public and publicly guaranteed debt stock in FY25, rollover and debt-servicing pressures have increased. Weak revenue collection and a bank-dominated investor base have compounded these pressures. External debt accounted for the remaining 44.4 percent of the debt.
The ADB emphasized that structural weaknesses, rather than a sudden deterioration in headline debt figures, pose the risks. Key vulnerabilities include a low tax-to-GDP ratio compared to other lower-middle-income economies, along with deficiencies in tax administration, public expenditure management, and debt administration.
