Debt, Inequality and a Broken Trust

A banker sitting at the counter sees two worlds side by side. One customer haggles over interest on a crore-taka loan (one crore equals ten million). Another nervously asks if they can withdraw a few thousand taka today. Same bank, same country. Two different realities.

That contrast captures Bangladesh’s economy well.

From a distance, it looks like calm river- smooth current, glinting water. Get closer, and you see eroding banks, clogged silt, and whirlpools forming beneath the surface. Over the past five decades, Bangladesh has achieved real progress. Poverty has fallen. Women’s economic participation has risen. The garment industry has carved out global market share. But the old growth model cannot carry the country much further. That much is now clear.

Borrowing once fuelled Bangladesh’s progress. Roads were built. Electricity reached new areas. Communication improved. Trouble starts when borrowing stops being part of a plan and becomes habit-every budget deficit answered with another loan.

The numbers show how heavy this has become. In 2024-25, the government borrowed more than 328,000 crore taka (roughly £2bn/$2.7bn). Total public debt now exceeds 2.25 million crore taka. Interest is the cruellest part of any debt. Last year alone, debt servicing cost more than 134,000 crore taka. One in every five taka the state spends goes to old obligations-money that never reaches schools, hospitals, or safety nets. It is today’s price for yesterday’s decisions.

Worse, much of this borrowing funded projects with doubtful returns. Some resemble grand buildings: striking from outside, but earning nothing inside, only costing upkeep. Debt then stops being a development tool. It becomes a silent burden for the next generation.

Why does borrowing not stop? The answer lies in the revenue structure. Bangladesh’s tax-to-GDP ratio has stayed below 7 per cent for years-like a river running low at its source. State income remains limited. Spending needs in education, health, and infrastructure keep growing. Borrowing fills the gap. But easy paths are not always sustainable ones.


The wealthiest 10 per cent hold roughly 60 per cent of national wealth. The bottom half share barely a few percentage points. This gap is no longer just a statistic. It has become a psychological map of society. Reports suggest middle-class savings eroded rapidly in 2025. Many families cut education spending. Many delayed medical treatment. These small decisions quietly compress an entire generation’s prospects.

Inequality does more than fuel unrest. It slows the economy itself. Those without income cannot consume. Without consumption, production stalls. Without production, investment dries up. Over time, this cycle weighs down the whole economy-like silt slowing a river’s current.

Every state survives on a quiet, unwritten contract. It exists nowhere on paper. No parliament passes it. Yet everyone assumes that paying taxes and obeying the law today earns security and opportunity tomorrow. Viewing Bangladesh’s crisis as merely a sum of debt, banking troubles, and inequality misses the point. The real crisis is that this social contract is cracking.

When people see today’s decisions land on their shoulders-with no seat at the table-trust erodes. We often call inequality a “side effect of development.” But it is not an accident. It is a policy outcome. A tax system leaning on VAT and indirect taxes puts the heaviest burden on the poor and middle class.

So if everyone understands the problem, why does reform stall? The answer lies more in politics than economics. Reform means redistributing power. Tax reform means taking more from the influential. Banking reform means reining in those who benefit from the status quo. These are political decisions, not technical ones. Long-term reform routinely gets deferred for short-term stability-an unspoken deal that says: don’t push today, deal with it tomorrow. But “tomorrow” piles up until it becomes a mountain.

Bangladesh must act on several fronts at once, not in isolation.First, digitise and speed up business registration, land registration, electricity connections, and tax payment. Policy predictability is the first condition for investor confidence. Tax breaks alone don’t attract investment-investors want rule of law, contract enforcement, and fast administration. Second, banking reform cannot wait. Non-performing loans and weak governance have strained the economy for years. Without a healthy banking system, neither industrialization nor job creation is sustainable. Third, invest in human capital. Bangladesh’s population is young, but without skills, this demographic won’t become an asset. Education must match industry needs. Artificial intelligence is already reshaping the global economy-without preparation now, Bangladesh risks falling behind. Fourth, secure energy through renewable and efficiency. Import-dependent energy has already shown its risks.

Real change must come through practice, not paperwork. The first condition is honesty-the state must state plainly where things stand, what risks lie ahead, and who bears which costs. Ambiguity offers short-term comfort but destroys long-term trust.

The second condition is fair burden-sharing. If reform costs keep falling on the same people, that isn’t reform-it’s inequality repeating itself. High earners and influential sectors must share the cost too.

The third condition is visible return. People accept taxes and hardship if they see real gains in education, health, or security. Citing GDP figures no longer reassures anyone. People want to know what the numbers mean for their own lives. Can the middle class save again? Do young people see real job prospects? Can a sick person get treatment without delay? Until these answers change, an impressive growth chart won’t calm an anxious society.

Amid the crisis, one hope remains: the future hasn’t been fully mortgaged yet. Opportunities still exist. Realigning global supply chains, a young workforce, geography, and entrepreneurial capacity could lift Bangladesh to new heights. But opportunity doesn’t turn into success on its own. It requires the right policies, strong institutions, and the courage to implement them.

The real question isn’t what the growth rate will be. It’s how solid, fair, and sustainable that growth’s foundation is. Will the state keep pushing its obligations onto the future-or finally take responsibility now? The answer will write Bangladesh’s next economic chapter. Much of that answer depends on the choices we make, as a society, in 2026.