Foreign loan commitments and disbursements decline; repayments rise in 9 months of FY26
Disbursements fall 19%, repayments rise 9.74% in Jul-Mar FY26
Bangladesh's external debt repayments and disbursements by development partners moved at almost parallel pace during the first nine months of the current fiscal year.
Bangladesh received $3.891 billion in foreign loan disbursements during July-March of FY26, while the government repaid $3.525 billion in external debt, according to a report by the Economic Relations Division (ERD), released today (30 April).
The report shows, during the period, both commitments and disbursements of foreign loans declined, while repayments increased. Compared with the same period a year earlier, disbursements fell by 19% and commitments dropped by 6.69%, while repayments rose by 9.74%.
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ERD officials said the early months of the fiscal year, including the interim government period, saw administrative instability, alongside weakening confidence among development partners. Slower project implementation during the election cycle further reduced disbursements.
They added that even after the new government took office, project execution has yet to regain momentum, with several ongoing projects undergoing fresh review, delaying fund releases.
At the same time, geopolitical tensions and energy supply pressures have forced the government to prioritise energy management, prompting a fresh reassessment of pipeline projects.
As a result, fewer new agreements have been signed with development partners, reducing commitments. However, officials said the government has begun a process to secure $3.2 billion in budget support to address energy and wider economic pressures.
Officials expect commitments to rise in the remaining months of the fiscal year.
According to ERD data, commitments during July-March stood at $2.804 billion, compared with $3.005 billion a year earlier. During the period, Bangladesh repaid a total of $3.525 billion in principal and interest, up from $3.212 billion in the same period last year.
Of this, principal repayments amounted to $2.276 billion, marking a 13.19% increase, while interest payments reached $1.248 billion, up by 3.96%.
'Govt now cautious in future borrowing'
Masrur Reaz, chairman and founder of Policy Exchange Bangladesh, said the lower levels of foreign loan commitments and disbursements in the current fiscal year were largely driven by political transition.
He said that for around eight months of the fiscal, Bangladesh was run by a non-political interim government. The administration was aware that an elected government would take over after the February polls, limiting its policy horizon and creating uncertainty in long-term decision-making.
"In such a situation, development partners naturally adopted a 'wait and see' approach. Before the new government's priorities, financing strategy and partnership approach became clear, they held back from making large new commitments," he said.
"As a result, commitments declined, although ongoing project implementation did not stop entirely and instead awaited direction under the new administration," he added.
The economist further said debt pressure has emerged as a key concern. Since the 2019-20 fiscal year, Bangladesh's borrowing has risen sharply, and repayment obligations have now begun to accelerate. "This is raising repayment pressure, creating new macroeconomic challenges," he added.
Against this backdrop, Masrur said the government is signalling greater caution in future borrowing, prioritising projects with strong economic and social returns. It is also expected to moderate external borrowing over the next few years to keep debt servicing pressures at a manageable level.
Russia releases most, ADB leads in commitment
Among development partners, Russia provided the highest disbursement during the period, releasing $828.38 million, largely for the Rooppur nuclear power project. The World Bank disbursed $464.56 million, while the Asian Development Bank released $607.60 million. China disbursed $521.24 million, followed by Japan with $312.85 million and India with $240.84 million.
In terms of commitments, the Asian Development Bank led with $1.269 billion, followed by the World Bank with $416.25 million. China pledged $235.69 million, while European Union countries collectively committed $392.07 million during the period.
