Foreign loan commitment, disbursements shrink amid rising repays
Business Report :
Country’s foreign loan commitments from development partners across the world decline by 3.23 percent to $ 2.27 billion in the first seven months of the current financial year of 2025-26 which was $2.35 billion in the same period of FY25.
Correspondingly, external loan disbursements stood at $2.641 billion during the July-January period of FY26, marking a 32.39 per cent downsized compared to the same period of FY2024-25.
In the same period of FY25, Bangladesh had received $3.938 billion in foreign loan disbursements.
However, surpassing the amount of new disbursements, Bangladesh paid $2.676 billion in principal and interest on previously taken foreign loans in the first seven months (July-January) of FY26, according to the provisional data published by Economic Relations Division (ERD) on Thursday.
This means debt repayment rose by 10 percent year-on-year during July-January of FY26, as Bangladesh had repaid $2.418 billion in the corresponding period of FY25.
Experts said loan disbursement fell mainly due to slower project implementation during the election period. At the same time, debt repayment rose as grace periods for many loans taken from development partners in previous years have ended.
However, officials noted that on a full-year basis, Bangladesh’s total loan repayment is unlikely to exceed total disbursement. For instance, in FY25, the country repaid $4.086 billion in foreign loans, while disbursements amounted to $8.56 billion.
Similarly, although repayments may rise by the end of FY26, they are not expected to surpass total disbursements, said experts.
The widening gap between aid receipts and debt obligations reflects the growing “fiscal pressure” cited in recent government reports.
With unused foreign funds still totalling over $43 billion due to slow project implementation, the government faces increasing urgency to improve its “absorption efficiency” to mitigate the impacts of rising repayment costs and shrinking new aid.
Meanwhile, According to IMF data, Bangladesh’s total public debt now stands at $188.79 billion, rising to 41 percent of GDP in the 2024-25 fiscal year, up from 39 percent the previous year. This includes $101.24 billion in domestic borrowing and $87.55 billion in foreign loans.
In FY25, domestic debt repayments amounted to 4.2 percent of the GDP, while external debt servicing remained stable at 1.2 percent.
