Published: 07:07 AM, 14 July 2026
External Loans Heavily Affect Our Strife for Self-Sufficiency
Bangladesh has made remarkable progress in economic development over the past five decades. From overcoming the challenges of poverty and natural disasters to becoming a lower-middle-income country, the nation has demonstrated resilience and determination. Massive investments in infrastructure, education, healthcare, and energy have transformed the country's economic landscape. However, much of this progress has been supported by external loans from bilateral partners, multilateral development banks, and international financial institutions. While foreign borrowing has helped finance essential development projects, excessive dependence on external loans has increasingly affected Bangladesh's struggle for self-sufficiency.
External loans are often considered necessary for developing countries with limited domestic resources. Bangladesh has borrowed funds to build highways, bridges, power plants, ports, railways, and other large-scale infrastructure projects that contribute to economic growth. These investments have created employment opportunities, improved connectivity, and strengthened industrial development. Nevertheless, loans are not grants. Every borrowed dollar must eventually be repaid with interest, placing a long-term financial obligation on the country.
One of the major concerns regarding external loans is the growing burden of debt repayment. As the volume of foreign borrowing increases, Bangladesh must allocate a significant portion of its national budget to repay principal amounts and interest. This reduces the government's ability to invest in critical sectors such as education, healthcare, agriculture, and social welfare. Instead of using public funds to improve the quality of life for citizens, a considerable share of national resources is directed toward servicing debt.
Another challenge is the impact of external loans on economic independence. International lenders often attach conditions to their financial assistance. These conditions may require policy reforms, changes in taxation, subsidy reductions, or structural adjustments that may not always align with the country's immediate needs or development priorities. Excessive reliance on foreign lenders can therefore limit Bangladesh's policy flexibility and influence national decision-making.
The depreciation of the Bangladeshi Taka against major foreign currencies further intensifies the problem. Since external loans are generally repaid in US dollars or other foreign currencies, a weaker Taka increases the actual repayment cost. Rising global interest rates and exchange rate fluctuations can significantly raise the country's debt servicing expenses, creating additional pressure on foreign exchange reserves. This situation becomes even more difficult during periods of global economic uncertainty, when export earnings and remittances may decline.
Dependence on foreign borrowing may also discourage efforts to strengthen domestic resource mobilization. Rather than relying heavily on external finance, Bangladesh must improve tax collection, reduce corruption, enhance financial transparency, and encourage domestic savings and investment. A strong internal revenue system can generate sustainable funding for development projects without increasing external debt. Similarly, promoting industrial diversification, expanding exports beyond the ready-made garment sector, and attracting productive foreign direct investment can strengthen the economy without creating repayment obligations. Despite these concerns, external loans should not be viewed as entirely harmful. When borrowed funds are invested wisely in productive sectors, they can generate long-term economic returns that exceed borrowing costs. Successful infrastructure projects can increase productivity, facilitate trade, attract investment, and create employment opportunities. The key lies in ensuring that loans are used efficiently, transparently, and for projects that deliver measurable economic and social benefits. Waste, corruption, cost overruns, and poorly planned projects can transform beneficial loans into heavy financial burdens.
Bangladesh must therefore adopt a balanced borrowing strategy. External loans should be limited to high-priority projects with strong economic viability. Regular monitoring, accountability, and independent evaluation of development projects are essential to ensure effective utilization of borrowed funds. At the same time, strengthening export competitiveness, expanding the tax base, encouraging innovation, supporting small and medium enterprises, and improving governance will help reduce dependence on foreign borrowing over time.
The private sector also has an important role to play in achieving self-sufficiency. Entrepreneurs, investors, and industries can contribute to economic growth by creating jobs, increasing production, and earning foreign exchange through exports. Investment in technology, renewable energy, agriculture, and human resource development can enhance national productivity and reduce the need for excessive external financing.
In conclusion, external loans have undoubtedly contributed to Bangladesh's development journey, but excessive dependence on them can weaken the country's pursuit of economic self-sufficiency. Rising debt obligations, foreign exchange pressures, and policy constraints highlight the importance of cautious borrowing and responsible financial management. Bangladesh's future prosperity depends not only on securing foreign funds but also on strengthening domestic capabilities, ensuring good governance, and promoting sustainable economic growth. By reducing unnecessary dependence on external loans and maximizing the efficient use of national resources, Bangladesh can move confidently toward a more self-reliant and resilient economy.
Nasir Uddin Shah is Chief Reporter
at The Asian Age.
