Staff Reporter :
Foreign debt repayments surged sharply at the start of FY2025-26, with Bangladesh paying more than twice the amount it received from development partners in July.
According to the latest Economic Relations Division (ERD) report released on Thursday, the government repaid $446.68 million in the first month of FY26 – comprising $327.72 million in principal and $118.96 million in interest.
In contrast, the country received only $202.44 million in fresh disbursements during the same period.
ERD officials said repayment pressure is rising as grace periods on several major loans have ended.
Many of these loans were contracted under stringent terms, involving short repayment schedules and relatively high interest rates, which are steadily increasing the burden.
Debt servicing is projected to climb close to $5 billion by the end of FY26.
For comparison, Bangladesh repaid $4.086 billion in FY2024-25, including both principal and interest.
By the close of FY2024-25, the country’s external debt stock had reached $74.34 billion, up 8% from the previous year.
Despite a more cautious stance on borrowing for mega projects, the government continued to seek budgetary support from development partners such as the World Bank and Asian Development Bank to stabilise macroeconomic conditions and bolster foreign reserves, ERD officials noted.
However, repayment pressure is expected to intensify further as the grace periods for several more large loans – including the Rooppur nuclear power plant – will expire within the next one to two years.
Economists share these concerns, pointing to the rapid rise in foreign borrowing in recent years.
M Masrur Reaz, chairman of Policy Exchange Bangladesh, said, “Since FY2016-17, debt management has faced mounting strain as the government undertook numerous large projects, many of which were unnecessary or poorly planned.”
He noted that many loans lacked proper feasibility studies, carried inflated budgets, or delivered limited economic returns. “Because of weak revenue mobilisation, Bangladesh has increasingly relied on foreign borrowing.
As a result, our external debt has doubled in just seven years. Both the pace and the composition of this growth are troubling.”
