Debt interest cost hits 13.6pc of new budget

The government has proposed allocating Tk 1.275 trillion for interest payments on public debt in fiscal year (FY) 2026-27, highlighting the growing cost of borrowing as a significant portion of the national budget.

The allocation accounts for 13.59 per cent of the total budget outlay, underscoring rising fiscal pressure from debt servicing obligations.

Finance Minister Amir Khosru Mahmud Chowdhury proposed the allocation in the national budget for FY2026-27, placed in parliament on Thursday.

Of the total interest expenditure, Tk 1.05 trillion will be spent on domestic debt servicing, while Tk 225 billion will go towards servicing foreign debt.

Interest payment allocation stood at Tk 1.27 trillion in the revised FY2025-26 budget, with the new proposal increasing it marginally by Tk 5 billion, according to budget documents.

The government borrows from both domestic and external sources to finance its budget deficit.

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