The United States' federal debt has crossed $40 trillion. The number is almost impossible to comprehend. To put it in perspective, it equates to roughly $117,000 per American—and it would take nearly 110,000 years to repay at $1 million per day.
But this does not mean the US government must repay all $40 trillion tomorrow. The United States remains a large economy with deep financial markets, and the US dollar is still the world's largest reserve currency, holding about 58% of global disclosed official foreign-exchange reserves. This gives Washington an exceptional ability to borrow.
For Bangladesh, the equation is not as simple as suddenly becoming responsible for part of America's debt. The connection is indirect—yet significant. It runs through a chain of financial linkages. When the United States borrows heavily, it issues Treasury securities to finance its deficits, and investors demand interest on those securities. This influences global financial conditions. If US yields remain high, dollar-denominated assets become more attractive relative to investments in emerging and frontier markets. That, in turn, affects currencies, capital flows, and borrowing costs elsewhere—including in Bangladesh.
For a country like Bangladesh—managing inflation, foreign-exchange pressures, high domestic interest rates, and the need to attract investment—these factors have become even more important for economic stability.
What Actually Happened With US Debt?
The $40.05 trillion debt milestone hit on August 18, 2026, is simply a headline. The real burden for the US economy comes from its massive interest payments.
Annual net interest payments for the US government have passed $1.1 trillion—surpassing the US defence budget. This comparison is particularly significant given America's substantial network of military bases across the globe, the war on Iran this year, and prolonged assistance for Ukraine to deter Russia from advancing further westward.
US governments have accumulated debt over decades. The debt has doubled since Donald Trump first took office in January 2017, when it stood at $19.95 trillion. The COVID-19 outbreak added further complexity, as the pandemic response led to a significant increase in debt in 2020.
Although Donald Trump initiated cost-cutting and efficiency measures at the beginning of his second term—with his Department of Government Efficiency (DOGE) slashing between 250,000 and 350,000 federal jobs and cutting global aid since the beginning of last year—the debt has continued to grow. Administrations and Congresses have repeatedly run budget deficits, spending more than the government collects in revenue.
The Congressional Budget Office projects that US federal debt held by the public will remain above the size of the US economy and rise from 101 percent of GDP in 2026 to 120 percent in 2036. Interest payments are also projected to become an increasingly large federal expenditure in the coming years.
That creates a potentially important issue. With interest rates rising and inflation knocking at the door, emerging economies are also likely to face persistent imported inflation.
One additional thing must be understood. Corporate businesses also issue securities to raise credit from the same pool of investors—as is the case with Google, Meta, Amazon, and Microsoft, which are issuing securities to finance their massive AI infrastructure. This creates additional demand for investment in US dollar-denominated assets. When US government and corporate borrowers simultaneously attract global capital, emerging economies can face stronger competition for investment flows. If investors shift funds toward US assets, demand for the dollar can increase, putting downward pressure on emerging-market currencies and making imports and foreign-currency debt more expensive.
Is Bangladesh Affected by US Debt?
Not directly. Bangladesh does not heavily invest in US Treasury securities. Countries like Japan, the UK, and China are among the major foreign holders of US Treasury securities. Instead, Bangladesh can be affected through the international financial system.
The easiest way to understand this is through the US dollar. The dollar remains the dominant global reserve and trading currency. A large portion of Bangladesh's international trade, commodities, cross-border lending, and financial transactions is conducted in dollars.
That means Bangladesh needs dollars for many essential economic activities—including paying for imported oil and gas, machinery, raw materials for the key garments industry, and other goods, as well as servicing foreign-currency obligations.
Now consider what happens when US interest rates and Treasury yields remain relatively high.
The Federal Reserve raised the benchmark interest rate by a quarter-percentage point (25 basis points) on September 16, 2026. This brought the federal funds rate target range up to 3.75%–4.00%, marking the central bank's first rate increase since July 2023—meaning rates remained unchanged throughout 2024 and 2025.
An international investor comparing a Bangladeshi asset with a US dollar asset does not look only at the return offered by Bangladesh. The investor also considers currency risk, political and regulatory risk, liquidity, and the possibility of moving money in and out of the country.
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If US dollar assets offer attractive returns with relatively low perceived risk, some global investors may have less incentive to take additional risks in emerging and frontier markets.
This does not mean investors automatically withdraw from Bangladesh. Foreign direct investment decisions are very different from short-term portfolio flows. But the required return for investing in Bangladesh can rise when global risk-free or low-risk dollar yields rise. That can make attracting capital more difficult and more expensive.
There are several channels through which America's debt and borrowing conditions can impact Bangladesh, including pressure on the taka to depreciate and rising domestic borrowing costs if the government has to introduce relatively higher interest rates at any point.
Moreover, Bangladesh's debt can become more expensive relative to government revenue, compounded by the fact that Bangladesh has serious structural weaknesses—its ability to raise revenue domestically remains insufficient. With a revenue-to-GDP ratio of around 8 percent, Bangladesh scores among the lowest in the developing world.
Bangladesh Needs A Resilient Economy
Economic hurdles affect everyone's cost of living, interest rates, economic growth, taxes, and government services. However, awareness enables the country to better prepare for and handle the next crisis. As of March 2026, per capita debt stood at Tk 129,239 for every Bangladeshi.
To make the country's economy more resilient, Bangladesh must strengthen its foreign-exchange resilience, maintain a strong banking sector, ensure robust fiscal management through improved tax collection, control inefficient expenditure, and ensure that borrowed money is directed toward productive investment.
However, Bangladesh needs to make itself more attractive to long-term foreign investors, as certain projects require such investments to grow from scratch—such as developing a semiconductor industry or expanding the blue economy.
These are economic measures; however, non-economic measures can also incentivize economic sectors. Transparency and responsible public spending can encourage people to pay bymore taxes to the government, while reducing bureaucratic hurdles, making customs and administration more efficient, and enforcing transparent rules can be as effective as managing headline debt or interest rates.
The stronger the country's underlying productive capacity, the better positioned it is to absorb external financial shocks.
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*Writer and independent journalist based in Dhak
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