The International Monetary Fund (IMF) has for the first time set a maximum US$ 8.44 billion ceiling of foreign borrowing for Bangladesh.

The global lender sets the external borrowing limit for the fiscal year 2025-26.

The new condition was revealed in the IMF’s ‘Bangladesh Country Report,’ published recently after the approval and release of the fourth and fifth tranches of the loan, totaling $1.34 billion.

This new limit is a key benchmark Bangladesh must meet to secure subsequent loan installments.

The report stipulates quarterly ceilings to monitor the country's debt management closely. A maximum of $1.91 billion in external borrowing in the first three months, $3.34 billion by the six-month mark, $4.34 billion after nine months, and the overall limit of $8.44 billion for the full fiscal year.

This borrowing limit was not part of the original $4.7 billion IMF loan program approved in 2023.

However, with the approval of the fourth and fifth tranches in June, the overall loan amount was increased by $800 million, and the program's duration was extended by six months. Bangladesh has so far received $3.6 billion under this program.

A senior official from the Finance Ministry informed the media that the limit was set based on the IMF’s latest Debt Sustainability Analysis (DSA).

The DSA has categorized Bangladesh as a 'medium-risk' country for two consecutive fiscal years, an escalation from its previous 'low-risk' status.

This change reflects an increased debt-repayment burden relative to export and revenue earnings.

According to the DSA, the debt-to-export ratio soared to 162.7 percent in the FY2023-24, significantly surpassing the projected 116-118 percent range.

The foreign debt-to-revenue ratio has also climbed, consequently restricting the country’s capacity for new borrowing.

The significant rise in foreign debt is largely attributed to spending on mega projects initiated by the now-ousted Awami League government.

An Asian Development Bank (ADB) report previously noted that Bangladesh’s foreign debt more than tripled over the last 13 years, marking the fastest debt growth in South Asia.

Official data indicate that foreign debt stood at only $2.03 billion in the 2009-10 fiscal year, which ballooned to $8.02 billion by FY2024-25.

However, officials in the interim government claim that the trend of taking on new debt has slightly slowed down compared to the past.