Published: 10:06 AM, 24 August 2026
Bangladesh Must Reduce Dependence on External Loans
Bangladesh has made significant progress in economic development over the past few decades. However, growing dependence on external loans to finance development projects and meet financial needs has become a matter of concern. Although foreign loans can support infrastructure development and economic growth, excessive dependence on borrowed money may create serious financial pressure in the future. Therefore, Bangladesh must take effective measures to reduce its dependence on external loans.
Foreign loans are not necessarily harmful. Developing countries often need external financing to build roads, bridges, power plants, railways, ports, schools and hospitals. Such projects can increase productivity and create employment. International development partners can also provide loans on relatively favourable terms for important social and economic programs. However, borrowing becomes risky when loans are used inefficiently, projects suffer from delays and the expected economic returns fail to materialize. One of the major challenges is the increasing burden of debt repayment. Bangladesh has to pay both the principal amount and interest on its external borrowing. As the volume of loans increases, a larger share of government revenue may have to be allocated to debt servicing. This can reduce the amount available for education, healthcare, social protection and other essential public services.
The country should therefore improve its domestic revenue collection. Bangladesh has a relatively low tax-to-GDP ratio compared with many countries. Expanding the tax base, reducing tax evasion, improving digital tax administration and bringing more economic activities into the formal system can increase government revenue. A stronger domestic revenue system would reduce the need to depend heavily on foreign borrowing.
Bangladesh must also ensure greater transparency and efficiency in public expenditure. Development projects should be selected according to national priorities and economic necessity rather than political considerations.
Proper feasibility studies, competitive procurement, regular monitoring and strict accountability can help prevent waste and corruption.
Another important step is to increase exports and diversify the country's export basket. Bangladesh has traditionally depended heavily on the ready-made garment sector. Developing pharmaceuticals, leather goods, information technology, agro-processing, light engineering and other industries can increase foreign exchange earnings and strengthen the economy.
Remittances from Bangladeshi workers abroad are another valuable source of foreign exchange. Better training, safer migration systems and opportunities for skilled employment abroad can help increase remittance earnings. In conclusion, external loans can contribute to Bangladesh's development when used carefully and productively.
