Govt to charge 0.25% fee on sovereign loan guarantees

The government has decided to introduce a 0.25% fee on guarantees issued against loans taken by state-owned, autonomous, and government-controlled entities.

In a circular issued by the Ministry of Finance today (2 June), it stated that the fee will apply to both local and foreign loans backed by state guarantees.

According to the circular, the Finance Division, under the authority of the Public Debt Act 2022 and the State Guarantee or Counter-Guarantee Policy 2014, will impose a one-time guarantee fee on loans taken under sovereign backing. The fee must be deposited into the government treasury through the designated payment system.

A Finance Division official told The Business Standard that the measure applies when state-owned companies, public entities, or joint ventures seek loans from domestic or international sources that require government guarantees. "The move aims to discourage excessive reliance on sovereign guarantees while also increasing revenue collection."

"State-owned and autonomous institutions often rely on borrowing to finance development projects, with lenders frequently requiring government guarantees as a condition. These guarantees are issued by the Finance Division on behalf of the government," the official added.

According to the ministry, by December 2025, the government had provided guarantees worth Tk106,973 crore for various domestic and foreign loans. Of this, Tk58,383 crore was in foreign loans and Tk48,590 crore in domestic loans.

More than half of the guaranteed loans are in the power sector. Guarantees have also been extended to agriculture-related loans and to Biman Bangladesh Airlines.

The government has also guaranteed foreign borrowing by the Bangladesh Petroleum Corporation (BPC) for fuel imports, as well as agricultural loans from Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank (Rakub).