Policy Implications of Restructuring Public Debt Portfolio in Bangladesh

Judicious public debt management is a sine qua non for a robust economy. The recent catastrophic consequences of debt management failures of some countries are a wake-up call for Bangladesh. As part of precautionary measures, Bangladesh must review its debt portfolio in order to decide whether to rely more on domestic debt than external debt. It should also decide which debt would be economically viable and less risky for Bangladesh. This decision would entail restructuring its debt portfolio between domestic and external debt, among development partners and debt instruments. In this article, such restructuring is done with the help of regression analysis and portfolio analysis. The results are quite striking and have profound implications for policy making.