Dhaka, June 18 -- Bangladesh plans gradually reducing reliance on external borrowing to finance budget deficits as rising cost of foreign loans makes the government inward-bound for pooling higher domestic funds.

The pivot towards ramped-up domestic borrowing -- particularly from the banking system -- is distinct in new budgetary plans. The budget documents for financial year 2025-26 draws an outlook of higher internal-resource mobilisation through FY2028.

As outlined in the strategic pivot in deficit financing, the exchequer will be drawing in higher volumes from bank borrowing, nonbank instruments, and the introduction of short-term Islamic bond called Sukuk.

Officials say the switch is aimed at ensuring a more balanced and sustainab...