Govt-backed loans to drop by Tk15,108cr on power sector repayments
Govt plans 0.25% fee on new guarantees to ensure financial discipline
Highlights:
- Government-guaranteed loans projected to decrease by Tk15,108 crore overall
- Power sector repayments drive most of the guaranteed loan reduction
- Rampal Power Plant repaid Tk17,000 crore India Exim loan
- Government guarantees create contingent liabilities affecting future fiscal stability
- Agriculture, food, and financial sectors saw guaranteed loans increase
- Government plans 0.25% fee on new loan guarantees
The amount of government-guaranteed loans against borrowings by state-owned financial and non-financial institutions is projected to decline by Tk15,108 crore in a year, mainly driven by large loan repayments made by several entities in the power sector.
Budget documents from the Finance Division show the government provided guarantees against loans worth Tk1,19,082 crore held by various institutions as of 30 June 2025. The amount is projected to fall to Tk1,03,974 crore by 30 June 2026.
Keep updated, follow The Business Standard's Google news channel
Finance officials explained that when state entities, state-owned companies or joint ventures borrow from domestic or foreign sources, lenders generally seek government guarantees.
The government provides such guarantees against their loans to support the implementation of various policy initiatives and programmes.
A government guarantee means that if the borrowing institution fails to repay the loan on time, the government assumes responsibility for settling the debt.
As a result, these guarantees have implications for the government's future fiscal position. Such guaranteed loans are treated as contingent liabilities of the government, officials said.
Power sector sees biggest reduction
An analysis of Finance Division data shows that various entities in the power sector repaid Tk18,366 crore in loans during the 2025-26 fiscal year.
The biggest contribution came from the Maitree Super Thermal Power Project (Rampal Power Plant). The project repaid Tk17,000 crore of its loan taken from India's Exim Bank.
Its outstanding loan stood at Tk17,115 crore at the end of June 2025, which is projected to fall to just Tk137 crore by June 2026. The project took the loan in 2017.
Besides, Ashuganj Power Station Company fully repaid two loans – Tk502 crore borrowed from HSBC Corporate Trustee Company (UK) and Tk244 crore from Standard Chartered Bank.
The Bangladesh Power Development Board (BPDB) repaid Tk310 crore of the loan taken for the Shahjibazar 330MW Power Plant Project.
The Ghorashal Third Unit Repowering Project repaid Tk400 crore, while the Ghorashal 365MW Combined Cycle Power Project repaid Tk252 crore.
The Bibiyana 335MW gas-based power project, several projects under North-West Power Generation Company, and Bangladesh-China Power Company also paying installments.
However, some new loans were also taken during the period. The Khulna 330MW Dual-Fuel Combined Cycle Power Plant took a loan of around Tk2,005 crore from the Bank of China.
Rural Power Company borrowed Tk85 crore and Tk180 crore for its Mymensingh and Patuakhali projects, while Saidpur 50MW Power Plant took Tk170 crore new loan.
Liabilities decline in aviation, fuel, telecom
The government-guaranteed loans of Biman declined by Tk1,488 crore. In the fuel sector, such loans fell by Tk908 crore, while the telecom sector saw a reduction of Tk206 crore.
Guaranteed loans rise in food, agriculture and financial sectors
The Bangladesh Sugar and Food Industries Corporation's guaranteed loans rose by Tk2,800 crore to Tk3,961 crore. It took new loans from Sonali, Janata and Agrani banks.
The Bangladesh Jute Mills Corporation's loans increased by Tk200 crore to Tk285 crore. The guaranteed loans of the Karmasangsthan Bank rose by Tk180 crore to Tk2,282 crore.
The largest increase was seen in fertiliser import loans taken by the Bangladesh Agricultural Development Corporation. The loans rose by Tk4,000 crore in a year to Tk21,880 crore.
In 2025, the organisation borrowed Tk1,324 crore from BRAC Bank and Tk850 crore from Prime Bank. The amounts borrowed from Sonali Bank and Janata Bank also increased.
Meanwhile, the guaranteed loans of the Ansar-VDP Development Bank increased by Tk250 crore to Tk1,000 crore, while those of the Probashi Kallyan Bank rose by around Tk1,400 crore to Tk2,012 crore.
To address the liquidity crisis in the stock market and repay high-interest legacy loans, the Investment Corporation of Bangladesh (ICB) received a new Tk3,000 crore loan facility from Bangladesh Bank against a sovereign guarantee from the government.
Move to impose fees on government guarantees
Finance ministry officials said the easy availability of government guarantees has led to weaknesses in financial discipline, inefficient investment and misuse of loans.
Against this backdrop, the government has decided to impose fees on the provision of guarantees. To this end, it has initiated moves to amend the "State Guarantee/Counter Guarantee Management Policy 2014", officials said.
Under the proposed policy, a one-time fee of 0.25% of the total loan amount will be charged against new loans guaranteed by the government. Officials believe the move will help ensure greater accountability and financial discipline in borrowing by state-owned entities.
