Bangladesh’s Emergent External Borrowing Scenario
Year: 2025
Type: article
Abstract: Bangladesh’s track record in terms of external debt carrying capacity has been quite comfortable till recent times. According to the World Bank (WB) and International Monetary Fund (IMF) framework regarding the capacity to carry debt, Bangladesh is considered to be a “moderate country”. However, in very recent times, the scenario has undergone significant changes, for several reasons. These include a higher pace of external borrowing used to underwrite public and publicly guaranteed projects, high interest rates consequent to Bangladesh’s middle-income graduation, weak debt management and corruption, and the over costing of some foreign-funded projects. Against this backdrop, the paper employs the Engle-Granger co-integration technique to estimate an external debt threshold for Bangladesh and compares it with the IMF-WB’s Low-Income Country Debt Sustainability Framework. The findings indicate that the debt carrying capacity has weakened in recent years. The paper proposes a number of recommendations towards a sound external debt management strategy for Bangladesh.
Source: Journal of Bangladesh Studies
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4409714164