Bangladesh is witnessing a slowdown in foreign loan inflows and new external financing commitments in the current fiscal year, while repayment obligations on existing external debt continue to rise, putting additional pressure on foreign exchange reserves and development financing.
According to a report released on Sunday by the Economic Relations Division (ERD), both foreign aid disbursements and fresh loan commitments declined significantly during the first 10 months of FY2025-26.
The government had set a target of $7.868 billion in foreign loan disbursements for the fiscal year. However, development partners released $4.236 billion between July and April, achieving 53.84 per cent of the target. This represents an 18 per cent decline compared to the $5.128 billion disbursed during the same period of the previous fiscal year.
Fresh foreign loan commitments also fell sharply during the period. Against a target of $6.715 billion for FY26, Bangladesh secured $2.807 billion in commitments in the first 10 months, achieving only 41.84 per cent of the annual target. In the same period last fiscal year, commitments stood at $4.259 billion, marking a decline of about 34 per cent year-on-year.
Meanwhile, external debt repayment costs have continued to rise. Bangladesh repaid $3.802 billion in principal and interest during July-April of FY26, compared to $3.507 billion in the same period a year earlier, an increase of 8.41 per cent.
Economists warn that the combination of falling foreign inflows and rising repayment obligations could further strain foreign exchange reserves and slow down the implementation of development projects if the trend continues.
