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Monday | September 28, 2026 | Dhaka

Aid falls, debt servicing rises

Foreign project assistance plunges over 60pc
 Staff Reporter
 Published: 12:56 AM, 28 September 2026  Updated: 11:27 PM, 27 September 2026

Bangladesh is facing a growing pressure on its external financing position as foreign project assistance fell by more than 60 per cent year-on-year in the first two months of the current fiscal year, while external debt servicing increased by nearly 4.8 per cent over the same period.

The country received only $294.56 million in project assistance during July-August of FY2026-27, compared with $750.07 million in the corresponding period of the previous fiscal year, according to provisional data from the Economic Relations Division (ERD).

The figures, contained in the ERD’s Foreign Assistance Monthly Report for FY2026-27, show that the sharp decline in development assistance coincided with a rise in the amount being paid to service the country’s external debt.

Of the project assistance disbursed during the two-month period, $291.37 million was in loans and $3.19 million in grants. In July-August of FY2025-26, Bangladesh received $746.16 million in loans and $3.91 million in grants.

Among major development partners, the Asian Development Bank (ADB) was the largest source of project assistance, disbursing $128.72 million during the period.

The International Development Association (IDA), the concessional lending arm of the World Bank, provided $73.96 million, while Japan disbursed $39.04 million.

India provided $30.30 million and Russia $20.65 million, with other development partners accounting for the remaining $1.89 million.

Commitments remain broadly stable
Foreign assistance commitments during July-August stood at $240.39 million, marginally lower than the $243.81 million committed during the same period of FY2025-26.

The latest commitments comprised $143.28 million in loans and $97.11 million in grants.

A major portion, $236.88 million, came from development partners categorised as other than ADB, IDA, the Asian Infrastructure Investment Bank (AIIB), India, China and Russia.

Japan committed a further $3.51 million during the period.

The relatively stable level of commitments, despite the sharp fall in actual disbursements, indicates a significant gap between assistance pledged and funds released for development projects during the opening months of the fiscal year.

Debt servicing rises
Meanwhile, Bangladesh’s external debt-servicing payments increased to $698.92 million in July-August 2026 from $667.11 million in the same period of FY2025-26.

The increase of $31.81 million represents a year-on-year rise of nearly 4.8 per cent.

Of the total amount paid during the latest two-month period, $516.04 million went towards repayment of principal and $182.88 million towards interest.

A year earlier, principal repayment stood at $488.79 million, while interest payments amounted to $178.32 million.

In taka terms, total debt servicing rose to Tk8,626.25 crore in July-August from Tk8,130.87 crore in the corresponding period of FY2025-26, an increase of Tk495.38 crore.

Principal repayment increased to Tk6,368.85 crore from Tk5,957.50 crore, while interest payments rose to Tk2,257.40 crore from Tk2,173.37 crore.

The contrasting trends – declining foreign project assistance and rising debt-servicing obligations – have added pressure to Bangladesh’s external financing position at the beginning of the new fiscal year.

The ERD’s Foreign Aid Budget and Accounts (FABA) wing said the figures for July-August FY2026-27 are provisional.