$453m repaid, $180m received
Bangladesh’s foreign debt-servicing burden is rising sharply as loan disbursements and commitments from development partners decline, with the country repaying 2.5 times more in principal and interest than it received in foreign loans in July.
The widening gap between fresh foreign financing and debt repayments is adding pressure to the country’s external position, as previously contracted loans increasingly enter their repayment phase.
According to data released by the Economic Relations Division (ERD) on Sunday, Bangladesh received $180.18 million in foreign loan disbursements from development partners in July 2026.
In contrast, the country repaid $453.23 million in principal and interest on loans during the month – about 2.51 times the amount disbursed.
Debt repayments also increased year-on-year. Bangladesh repaid $446.68 million in July 2025, meaning the repayment bill rose by nearly 4 percent this July.
Principal repayments increased by about $14 million, while interest payments fell by $7.45 million.
At the same time, foreign loan disbursements declined by $28.06 million, or around 13.5 percent, from $208.24 million in July 2025.
No foreign assistance was disbursed under the food assistance category in either July 2026 or July 2025.
Foreign aid commitments plunge
The decline was even more pronounced in new foreign aid commitments.
Development partners committed only $14.05 million in foreign assistance in July 2026, all of it in grants.
The amount was nearly six times lower than the $83.46 million committed in July 2025.
The July 2025 commitments comprised $77.46 million in grants and $6 million in loans.
The sharp fall in commitments suggests that the pipeline of new externally financed development projects remains weak, even as the government faces growing obligations to service loans contracted in previous years.
Experts said foreign loan disbursements have slowed because development activities financed by external borrowing have yet to regain momentum.
The government is still identifying projects considered to offer better value for money and stronger economic returns, they said.
Repayment pressure building
The growing repayment burden is also linked to the large volume of foreign borrowing undertaken during the 17-year tenure of the previous Awami League government led by Sheikh Hasina.
Bangladesh borrowed nearly $86 billion in foreign loans between FY2008-09 and FY2025-26, while repaying just over $31 billion in principal and interest combined.
Many of the projects financed by those loans have already been completed, while work on several others remains under way. Repayment on a number of completed projects has already begun.
Experts said the pressure of foreign debt repayments had been increasing steadily for more than two years and was expected to rise further as more previously contracted loans enter their repayment periods.
Bangladesh’s external debt stood at around $78 billion in February 2026. Of the total, 61.97 percent was concessional borrowing, while 38.03 percent was non-concessional debt.
The repayment burden has already risen significantly. Bangladesh repaid $4.494 billion in principal and interest in FY26, up from $4.087 billion in FY25, according to ERD data.
In FY24, foreign debt repayments totalled $3.37 billion, including $2.02 billion in principal and $1.35 billion in interest.
Steep repayment trajectory ahead The latest figures point to a potentially challenging period ahead as Bangladesh moves from an era of heavy foreign borrowing towards one of increasingly substantial debt servicing.
The country is expected to spend around $26 billion on external debt servicing between 2026 and 2030 – an amount equivalent to nearly two-thirds of what it repaid over the previous five decades.
Over a longer horizon, repayments could reach $51 billion by 2035, with annual obligations projected to peak at around $5.5 billion towards the end of the decade.
The combination of declining new loan flows and rising repayments underscores the need for greater scrutiny of externally financed projects, particularly their economic returns, foreign-exchange generating capacity and ability to support sustainable growth.
With Bangladesh facing a steep repayment trajectory, experts say careful selection of new projects and stronger management of existing foreign debt will be crucial to containing external financing risks while preserving the resources needed for development.
