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Average Debt Per Capita is Tk 17,366: Bangladesh’s Growing Debt Crisis and Changing Poverty Landscape

Bangladesh’s Growing Debt Crisis and Changing Poverty Landscape


Bangladesh has been in a changing economic field characterized by a combination of positive progress and troubling challenges in recent years. The unveiling of the Household Income and Expenditure Survey (HIES) 2022 by the Bangladesh Bureau of Statistics (BBS) provides an important lens into the country’s economic dynamics. Of particular concern is the additional increase in per capita debt to an average of Rs 17,366. This article attempts to dissect the complex effects of this growing debt crisis by examining its roots, responses, and the broader socio-economic canvas in which it unfolds.
A nation’s economic narrative is intricately woven with threads of financial stability, social well-being, and future growth prospects. The HIES 2022 report serves as a compass, guiding us through the contours of Bangladesh’s economic journey, wherever-increasing per capita debt casts a shadow over the country’s financial sector.
As we delve deeper into the complexities of this debt crisis, it becomes imperative to uncover the underlying factors that have left a significant portion of the population in the clutches of debt. At the same time, this growing debt burden demands careful examination of the consequences, both at the individual and societal levels. Moreover, understanding the larger socio-economic context in which this crisis arises is crucial to developing effective strategies that not only address the immediate challenges but also enhance sustainable economic well-being for the people.
In this exploration, we aim to navigate through the various dimensions of Bangladesh’s per capita debt growth – from its origins to the impact it has created on different segments of society. When we scrutinize the data and insights presented by HIES 2022, a nuanced picture emerges, highlighting the interconnected nature of economic phenomena and the need for comprehensive, targeted interventions.

Debt Dilemma:

The HIES 2022 report has uncovered a depressing reality that grips the economic fabric of Bangladesh – a staggering 37 percent of the population currently supports their families through debt. This revelation serves as a clear indicator of the financial struggle faced by a significant section of citizens. At the heart of this economic problem is the sharp rise in average debt at the national level, to Rs 73,980 per household. This marks a personal burden of Rs 17,366 per capita, illustrating a burden that has turned into an unavoidable financial crisis for many. The response to this debt epidemic is not uniform; Rather, they underscore the growing economic disparity between urban and rural areas. Urban dwellers, in particular, find themselves grappling with relatively high debt burdens, illuminating a stark divide in economic reality. This stark contrast in debt distribution calls for a nuanced examination of the root causes of rising household debt and an urgent call for targeted interventions to reduce the burden on vulnerable segments of the population.
A growing debt crisis acts as a harbinger of economic instability with far-reaching implications for the overall welfare of both individuals and society at large. Its implications extend beyond the numerical representation of debt, which penetrates the essence of household financial stability. As urban areas are saddled with a more pronounced debt burden, the divide between the rural and urban economic landscape widens, posing a threat to the country’s economic cohesion. This crisis not only hinders the family’s ability to plan for the future but also contributes to increased stress levels, interpersonal relationships, and compromised emotional well-being. Thus, as the nation grapples with this debt crisis, a comprehensive understanding of the root causes and consequences becomes paramount, laying the foundation for informed policy decisions and targeted initiatives to uplift those caught in the spiral of spiraling debt.

Factors driving credit growth:

1. Inflationary Pressure:

Bangladesh’s growing debt crisis finds its roots in the relentless grip of inflationary pressures, which emerged as a powerful driver driving the nation into a spiral of spiraling debt. High inflation has become a pervasive force, putting undue pressure on the cost of living for families across the country. As basic necessities become increasingly expensive, households find themselves trapped in a precarious predicament, forced to resort to debt as a means of bridging the growing gap between income and expenditure. This economic phenomenon creates a vicious cycle of debt, as households, grappling with rising prices of daily necessities, become enmeshed in financial dependence on borrowed funds. The obligation to borrow to meet basic subsistence needs contributes to a self-reinforcing cycle, increasing the burden of debt on individuals and households, and requires a holistic examination of inflationary dynamics and their implications in the broader economic landscape.

3. Economic Policy and Planning:

The startling revelation of 111.10 per cent increase in average debt per household in just six years, uncovered by the HIES report, stimulates a critical examination of the effectiveness of Bangladesh’s economic policy and planning system. This meteoric rise in household debt serves as a barometer of the effectiveness, or lack thereof, of existing economic strategies in protecting the financial well-being of the people. The data raises questions about the evolving economic landscape and their ability to address the challenges citizens face, signaling a pressing need for an introspective evaluation of policies.
The significant rise in debt levels indicates that current economic policies may not be adequately equipped to mitigate the impact of inflation, urbanization and other socio-economic factors affecting household financial stability. Policymakers must examine whether the existing framework is responsive to the dynamic needs of the population, especially in a rapidly changing economic environment. This revelation underscores the need for reshaping economic strategies, ensuring that they are not only adaptive but also inclusive, addressing the diverse needs and vulnerabilities of citizens. As Bangladesh navigates the complex terrain of economic development, a reassessment of policies and plans has become paramount to creating a sustainable, equitable and resilient financial landscape for its people.

Consequences of increasing debt:

1. Impact on family stability:

The growing burden of debt in Bangladesh has profound implications, with the first loss being household stability. As debt levels rise, households are pushing themselves into financial insecurity, triggering a cascade of detrimental effects on overall stability. The mounting debt burden not only induces higher stress levels but also strains interpersonal relationships within families. The constant mounting pressure to meet financial commitments and debt repayment obligations can create a tense environment, destroying the harmony that is essential to a stable and nurturing home environment.
Moreover, the detrimental effects of mounting debt extend to the mental well-being of individuals within these households. Constant worry about financial obligations and vague fear of indebtedness can lead to heightened anxiety and emotional distress. Mental well-being, a foundation of a thriving society, becomes a casualty when individuals struggle with the stressors of financial stress.
In fact, the debt burden acts as a strong barrier to future planning for the family. Long-term investments in essential areas such as education, healthcare and housing are compromised. Families trapped in cycles of debt hinder their ability to secure a stable future for themselves and their children, perpetuating a cycle of financial vulnerability that transcends generations. The consequences of rising debt, therefore, extend beyond the numerical limitations of financial obligations to social stability and individual well-being. As Bangladesh confronts these daunting challenges, addressing the consequences of household stability should be a focus for policymakers seeking to create a resilient and prosperous economic landscape for all citizens.

2. Economic Inequality:

Another acute response to the growing debt crisis in Bangladesh is the deepening of economic inequality, particularly evident in the pronounced urban-rural divide in debt burden. Unequal distribution of credit exacerbates existing inequalities, creating a strong barrier to upward mobility for people living in urban areas. As cities became centers of economic activity, the burden of debt became heavier on city dwellers, hampering their ability to climb the socioeconomic ladder.
The widening gap between urban and rural debt burdens not only reflects economic disparity but also accentuates the challenges faced by those striving for a better life in urban centres. Limited access to financial resources, coupled with increased cost of living, can lock urban individuals into a cycle of perpetual debt, hampering their prospects for improving their economic status. This phenomenon not only undermines the principles of social justice but also threatens the fabric of national unity, as disparity in economic opportunities creates divisions within society.
The consequences of economic inequality extend beyond the individual household, permeating the entire social structure. Persistent disparities in wealth and economic opportunity undermine the fundamental principles of a just and equitable society, potentially fueling discontent and social unrest. Hence, as Bangladesh grapples with a growing debt crisis, addressing the widening urban-rural economic gap has become imperative to building a more equitable and inclusive nation where opportunities for growth and prosperity are accessible to all. Policymakers must strive to create an economic landscape that bridges these divides, ensuring that the benefits of development are shared equally among different segments of society.

3. Potential for a debt trap:

Bangladesh’s growing debt crisis not only threatens immediate stability but also poses a potential debt trap. Individuals and families trapped in an endless cycle of debt can find themselves grappling with daunting challenges to break free, perpetuating a state of chronic financial vulnerability. This alarming situation not only hampers individual economic prospects but also poses a considerable threat to national economic growth.
The debt cycle, once started, can create a self-perpetuating loop where individuals struggle to meet existing financial obligations, leading to more borrowing to meet immediate needs. This continuous cycle significantly limits the ability of affected individuals and households to accumulate savings, invest in education or engage in productive economic activities. As a result, the possibility of a debt trap arises, trapping a significant section of the population in the web of financial insecurity.
At the national level, widening debt trap conditions can have a detrimental effect on economic growth. A large section of the population grapples with financial vulnerability, less likely to contribute meaningfully to economic activity, hindering productivity and hindering overall economic progress. The ripple effect of people trapped in perpetual debt cycles can hamper a nation’s ability to achieve sustainable development goals, exacerbating social and economic challenges.
Addressing the potential for debt traps requires a multi-pronged approach that includes both policy interventions and financial education initiatives. By breaking the cycle of debt at the individual level, Bangladesh can not only protect the economic potential of its citizens, but also strengthen the foundation for greater national economic resilience and prosperity. Policymakers must prioritize initiatives that enable individuals to escape the clutches of perpetual debt, building more resilient and economically vibrant societies.

Changing dynamics of poverty:

While the debt crisis is a cause for concern, the HIES 2022 report also highlights a positive trend – a significant reduction in extreme poverty from 2016 to 2022. The extreme poverty rate using the lower poverty line dropped from 12.9 percent to 5.6 percent nationally. . However, it is crucial to examine the nuances of poverty trends across regions and understand the dynamics that contribute to these changes.

1. Regional Discrimination:

The shocking shift in the highest poverty rate from Kurigram to Barisal highlighted in the HIES 2022 report serves as a stark reminder of regional disparities in economic development within Bangladesh. This shift underscores the critical need for policymakers to prioritize addressing these regional imbalances as the basis of their agenda to foster inclusive growth. The diversity of poverty rates across regions underscores the multifaceted challenges that different regions grapple with, demanding targeted strategies tailored to the unique circumstances of each locale.
The transition of the highest poverty rate from Kurigram to Barisal brings to the fore the dynamic nature of poverty and economic development. This highlights the fact that the fight against poverty is not a one-size-fits-all effort. Rather, it requires a nuanced understanding of the specific challenges facing individual regions, from resource availability and infrastructure development to education and employment opportunities.
For policy makers, addressing regional disparities should be at the forefront of their agenda. Inclusive growth requires targeted interventions that promote areas facing higher poverty rates, ensuring that the benefits of economic development are equitably distributed. By tailoring policies to each region’s unique needs and challenges, policymakers can lay the foundation for a more balanced and harmonious economic landscape, which can not only reduce poverty but also promote sustainable and inclusive growth across Bangladesh’s diverse tapestry.

2. Urban and Rural Contrast:

The sharp urban-rural contrast in extreme poverty rates revealed by the HIES 2022 report presents a narrative of progress and continuing challenges within Bangladesh’s socio-economic structure. A significant reduction in the urban extreme poverty rate from 7.6 percent in 2016 to 3.8 percent in 2022 indicates significant improvement in urban living standards. However, this positive trend stands in contrast to the challenges that persist in rural areas, where the extreme poverty rate remains at 6.5 percent in 2022. Bridging this urban-rural gap requires targeted interventions that address the specific needs and barriers faced by each setting.
The apparent decline in extreme poverty within urban areas indicates positive economic change, potentially driven by increased economic opportunity, improved infrastructure and increased access to social services. Nevertheless, the challenges that persist in rural areas emphasize the continued need for focused initiatives. Rural communities face unique barriers, including limited access to education, health care and employment opportunities Addressing these challenges requires a strategic approach that goes beyond one-size-fits-all solutions.
To effectively bridge the urban-rural gap in extreme poverty, policymakers must establish targeted interventions that take into account the unique dynamics of each setting. Investing in rural infrastructure, improving access to quality education and health care, and increasing sustainable economic opportunities are important steps. Empowering rural communities with the tools they need to break free from the chains of extreme poverty not only promotes their well-being but also promotes a more balanced and inclusive national development trajectory. As Bangladesh charts its course toward a more equitable future, acknowledging and addressing the urban-rural contrast is critical to building a nation where prosperity knows no geographic boundaries.

Challenges of food insecurity:

The HIES 2022 report puts a revealing spotlight on the pervasive issue of food insecurity, painting a nuanced picture that underscores the challenges facing both urban and rural communities in Bangladesh.

1. Rural-urban disparity:

The rural-urban disparity in food insecurity rates, 22.36 percent in rural areas compared to 18.37 percent in urban areas, raises red flags about equitable access to essential food resources across the country. This contrast underscores the need for a comprehensive and targeted approach that addresses the complex web of agricultural, distribution, and access challenges prevalent in rural areas.
In rural areas, where a significant portion of the population depends on agriculture for livelihood, erratic weather patterns, limited access to modern farming techniques and inadequate infrastructure contribute to food system vulnerability. Addressing this challenge requires multifaceted interventions, including investments in agricultural technology, irrigation facilities, and education for farmers.
Distribution channels and market access are critical components of the food supply chain. In many rural areas, inadequate infrastructure and transportation networks hinder the efficient movement of food products, resulting in high prices and reduced accessibility. Initiatives focused on improving rural infrastructure and streamlining distribution networks are critical to ensuring food reaches those who need it most.
Equally significant is the need for efforts to increase access to food in rural areas. These include initiatives such as promoting local markets, community-supported agriculture, and ensuring access to social safety nets for vulnerable populations.
To address these rural-urban disparities in food security, policymakers must adopt a holistic approach that recognizes the unique challenges each environment faces. By developing a comprehensive strategy that includes agricultural development, efficient distribution systems and increased access to food resources, Bangladesh can make significant progress towards achieving food security for all its citizens, regardless of geographic location.

2. Severe food insecurity:

The HIES 2022 report sheds light on the country’s food landscape, indicating that 1.13 percent of the population experienced severe food insecurity in the same year. The revelation serves as a poignant call to action, demanding targeted measures to protect food accessibility and affordability for Bangladesh’s most vulnerable populations.
The term “severe food insecurity” goes beyond mere scarcity; It speaks to a critical situation where individuals and families lack consistent access to adequate amounts of nutritious food. This subset of the population is at high risk of malnutrition, compromised health, and decreased overall well-being.
To effectively address severe food insecurity, targeted measures must be implemented to strengthen the resilience of the most vulnerable segments of society. It involves a combination of short-term interventions and long-term strategies that address the root causes of food insecurity. Initiatives such as subsidized food programs, nutrition assistance for vulnerable groups, and the establishment of community food banks can provide immediate relief to those experiencing severe food insecurity.
Long-term strategies should focus on increasing agricultural productivity, enhancing food distribution networks, and increasing sustainable livelihoods for vulnerable communities. By investing in education, skills development, and income-generating opportunities, policymakers can empower individuals and families to break free from the cycle of acute food insecurity.
Furthermore, ensuring food accessibility involves removing barriers that prevent marginalized populations from accessing available food resources. These may include improving transport infrastructure, implementing targeted social welfare programs and leveraging technology for efficient food distribution.
As Bangladesh faces the challenge of severe food insecurity, concerted efforts by policymakers, non-governmental organizations and the private sector are essential. By adopting a multipronged approach that combines immediate relief measures with sustainable, long-term strategies, nations can work toward building a food-secure future in which no one is left to face the debilitating effects of hunger and malnutrition.


In conclusion, the unveiling of the HIES 2022 report paints a vivid portrait of Bangladesh’s economic panorama, revealing both the triumphs and tribulations that shape the nation’s trajectory. The reduction of extreme poverty stands as a beacon of progress yet is overshadowed by persistent challenges such as the growing debt crisis and food insecurity that demand urgent attention from policymakers. As Bangladesh navigates the complex currents of economic development, a holistic approach becomes imperative—one that not only celebrates achievements but also addresses and mitigates obstacles that threaten the well-being of its citizens.
The positive trend in reducing extreme poverty indicates the effectiveness of targeted efforts and interventions over the past six years. However, the sharp rise in per capita debt calls for a reorientation of economic policies to protect households from the vagaries of financial instability. Rural-urban disparities, particularly in extreme poverty rates and food security, highlight the need for nuanced strategies to address the specific challenges facing different regions. Policymakers must prioritize initiatives that bridge these gaps, creating an environment where every citizen has an equal opportunity to thrive.
Food insecurity, especially severe instances affecting a significant percentage of the population, requires not only immediate relief measures, but also sustained, systemic change. A concerted effort to strengthen agricultural systems, improve distribution networks and empower vulnerable communities is critical to ensuring long-term food security for all.
In paving the way for progress, policymakers are tasked with the difficult task of creating an economic landscape that transcends individual challenges to take a holistic view of progress. Regional disparities must be narrowed, economic policies must be refined and growth strategies must be reimagined to accommodate the diverse needs of the people of Bangladesh. The pursuit of an inclusive and sustainable future requires a collective commitment to address the multifaceted dimensions of the economic landscape, so that the dividends of progress are shared equally among all Bangladeshis.

Billal Hossain
Billal Hossain
Billal Hossain, a seasoned professional with a Master's degree in Mathematics, has built a rich and varied career as a banker, economist, and anti-money laundering expert. His journey in the financial sector has seen him in leading roles, notably in AL-Rajhi Banking Inc. in the Kingdom of Saudi Arabia and as Foreign Relations and Correspondent Maintenance Officer of Bank-AL-Bilad. Beyond the confines of traditional finance, Billal has emerged as a prominent writer and commentator, contributing thought-provoking columns and theses to various newspapers and online portals. His expertise spans a wide range of important global issues, including the complexities of economics, political dynamics, the plight of migrant workers, remittances, reserves, and other interrelated aspects. Billal brings a unique analytical perspective to his writing, combining academic rigor with practical insights gained from his banking career. His articles not only demonstrate a deep understanding of complex issues but also provide readers with informed perspectives, bridging the gap between theory and real-world application. Billal Hossain's contributions stand as a testament to his commitment to unraveling the complexities of our interconnected world, providing valuable insights that contribute to a broader and more nuanced understanding of the global economic landscape.


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