ADB urges Bangladesh to establish dedicated debt management office

The Asian Development Bank (ADB) has recommended that Bangladesh establish a dedicated debt management office to improve oversight of public debt, warning that the country's fiscal space is narrowing ahead of its graduation from least developed country (LDC) status in November.

The recommendation was made in a comprehensive ADB assessment of Bangladesh's governance and macrofiscal reforms, released yesterday (23 May).

The report reviews the country's fiscal strengths, structural weaknesses and reform priorities as of 2024.

According to the report, Bangladesh's public debt has risen to 41% of gross domestic product (GDP).

The ADB said debt management remains fragmented, with data spread across multiple institutions, while a medium-term debt management strategy has yet to be institutionalised and public reporting remains inadequate.

To address these issues, the report recommends integrating debt databases and consolidating debt management functions under a single dedicated office with responsibility for managing and publicly disclosing the country's debt position.

The report also highlights broader fiscal challenges, including persistently low revenue collection, widening external imbalances and shrinking policy space.

It warns that these pressures could become more difficult to manage after Bangladesh loses trade and financing concessions following its graduation from LDC status.

The assessment identifies weaknesses in policy, legal and institutional frameworks that it says are affecting macrofiscal stability and public service delivery.

At the same time, the ADB notes progress in several areas. It says the enhanced Integrated Budget and Accounting System (iBAS++) has improved budget execution, steps have been taken towards adopting International Public Sector Accounting Standards, and public procurement frameworks have been strengthened.