Foreign loan repayments resume after over a week's pause

Payments of principal and interest on foreign loans for various development projects and government purchases of oil, gas, and fertilisers have resumed after more than a week's pause, according to sources from the Economic Relations Division (ERD).

An ERD official, speaking anonymously, told TBS that the Bangladesh Bank was authorised yesterday to proceed with the overdue repayments.

While the central bank is responsible for making these payments, the ERD prepares the payment schedule and sends it to the central bank through the Finance Division.

Sources from ERD, Finance Division, and Bangladesh Bank said that loan repayments were halted by about 10 days due to the severe political unrest and the ouster of the Awami League government, which brought the country to a standstill.

ERD officials said this is the first time Bangladesh has missed foreign loan repayments, marking an unprecedented event in the country's history.

Bangladesh maintains a consistent daily schedule of foreign loan repayments, including principal and interest, even on government holidays.

The country typically disburses around $10 million daily for development and budget support loans and an additional $25-26 million for fuel and fertiliser imports.

Currently, there are about 300 active foreign-funded projects, with regular interest payments required. This also includes repaying the principal on loans taken as far back as 30 years ago.

In the 2023-24 fiscal year, $3.35 billion was paid for project-related loans, with $2 billion allocated for principal and $1.34 billion for interest.

Looking ahead, the government expects to disburse around $4.5 billion this fiscal year as the repayment of several mega project loans is set to begin.