Media: Bangladesh is Paying for Chinese Loans with Growing Debt - and Not Learning Lessons
Internal Acknowledgments of Debt
The debt situation in the country is no longer just the opinion of external experts; this acknowledgment has come from the very top of Bangladesh's financial leadership. According to the chairman of the National Revenue Board, M. Abdur Rahman Khan, the country has indeed found itself in a debt trap. This acknowledgment did not come as a surprise, as Bangladesh is following in the footsteps of its neighbors, such as Sri Lanka, by participating in the Chinese initiative "One Belt, One Road" (BRI) and facing its negative consequences.Debt servicing has become a significant item in budget expenditures, constituting the second largest item. The level of public debt relative to GDP has reached over 39%, while in 2017–2018, this figure was around 34%. "We have indeed fallen into a debt trap," emphasized the head of the tax authority at a recent seminar, adding that ignoring this reality complicates moving forward.
Problem Acknowledged, but No Solutions
Leading financial analysts and officials, discussing the dire financial situation, acknowledge their inability to propose solutions, creating a paradox. Economist Mustafizur Rahman noted that previously, spending on agriculture and education ranked second in the budget after salaries and pensions, whereas this is no longer the case. Financial Secretary M. Khairuzzaman Mozumdar added that the current budget is, for the first time in history, smaller than the previous year's budget, noting that "a thin person is asked to lose even more weight."Worrying Data from the World Bank
According to the World Bank's International Debt Report for 2025, Bangladesh's external debt has increased by 42% over the past five years. By the end of 2024, the total amount of external loans reached approximately $105 billion, while in 2010, it was only $26 billion.The external debt now constitutes 192% of export earnings, and servicing payments have reached 16% of exports, indicating growing pressure on the country's financial system.
Concerns About a Repeat of the Sri Lankan Scenario
Bangladesh's increasing dependence on Chinese loans raises concerns that the country may repeat the fate of Sri Lanka, which faced sovereign default and economic collapse in the early 2020s after excessive borrowing from China.Unlike Bangladesh, Pakistan has requested $7 billion from the IMF to service its debts incurred under the China-Pakistan Economic Corridor, where Islamabad owes Beijing about $30 billion.
Chinese Loans and Growing Obligations
Having participated in BRI projects for over a decade, Bangladesh expects to attract about $40 billion from China, of which $14 billion is intended for joint projects. In 2022, when Bangladesh's debt to China was approximately $4 billion, then-Finance Minister Mustafa Kamal expressed concerns about the risks of Chinese lending, pointing to low borrowing standards and the threat of excessive debt.However, over three years, the country's external debt to China has increased to $7 billion, adding vulnerabilities to the economy.
Change of Course in Hasina's Government
Bangladesh officially joined the "One Belt, One Road" initiative in 2016 following a visit from Chinese President Xi Jinping. At that time, the government led by the Awami League party and Prime Minister Sheikh Hasina was cautiously inclined towards the terms of Chinese loans. She rejected Beijing's assertion that the Padma River bridge, built for $3.6 billion, is a BRI project, emphasizing that it was fully funded from Bangladesh's internal budget.The situation changed with the arrival of the interim government led by Muhammad Yunus. His first overseas visit in March 2025 resulted in securing $1.2 billion in investments and grants from China. The total volume of Chinese investments in Bangladesh's economy in 2024–2025 exceeded $42 billion, and Yunus even proposed relocating some production to Bangladesh during a meeting with Xi Jinping.
China's Long-Term Strategy
Beijing is actively establishing contacts not only with the interim government but also with other political forces in Bangladesh. For example, Chinese diplomats have begun cooperating with "Jamaat-e-Islami," an organization that has not criticized China's policies regarding the Uyghurs. In December 2024, Islamic political leaders from Bangladesh visited China at the invitation of the Communist Party of China.The Chinese embassy is also actively engaging with "Jamaat-e-Islami," holding meetings with their leadership and organizing official receptions.
Geopolitical Interests Under the Guise of Infrastructure
The BRI initiative is becoming a tool for China to strengthen its positions in participating countries. Islamic groups in Bangladesh actively support the expansion of Chinese investments. For instance, on October 19 of this year, the student wing of "Jamaat" held a mass rally urging the interim government to accept China's proposal for managing the Teesta River.The "Teesta" project is located in a strategically important area, and China is interested in expanding its influence in this region. In particular, Beijing has offered Dhaka a loan of $336 million for the development of the Mongla port, which could make the Chittagong port a key element of China's "string of pearls" in the Indian Ocean.
As noted in a study by the Bangabandhu Sheikh Mujibur Rahman Science and Technology University, "Chinese investments have accelerated infrastructure development but have also increased Bangladesh's debt burden and its dependence on China."
The strategic placement of these investments indicates possible geopolitical motives behind Chinese financing.
The Heavy Price for Bangladesh
Thus, Bangladesh continues to pay the price for accepting Chinese loans, facing rising debt and strategic vulnerability. Despite the lessons learned by its neighbors, Dhaka seems reluctant to apply this knowledge to change its situation.
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