Both commitments and disbursements of foreign loans increased in Q1 of FY26
Both commitments and disbursements of foreign loans increased in Q1 of FY26
Both commitments and disbursements of foreign loans increased in the first four months of the current fiscal year, while Bangladesh's debt-servicing burden continued to climb.
Development partners pledged $1.20 billion in assistance during the July-October period, up from just $254 million the previous year, representing a surge of around 375 percent, according to new data released yesterday by the Economic Relations Division (ERD). Of the total commitments, about $1.11 billion was in the form of loans, while the remaining $89 million came as grants.
Similarly, disbursements also picked up, with Bangladesh receiving $1.66 billion compared to $1.20 billion a year ago.
Commitments and disbursements rose this year because last year's political turmoil had slowed development activities and delayed project implementation.
However, the government paid $1.58 billion in external debt servicing between July and October of FY26, up from $1.44 billion in the same period a year earlier.
Principal repayments rose to $1.02 billion, while interest payments reached $560 million, reflecting the growing pressure of maturing infrastructure loans and a weaker taka. In taka terms, the outflow is even more significant due to the currency's depreciation.
Total debt servicing in the first four months amounted to nearly Tk 19,314 crore, up from Tk 17,148 crore last year—an increase of about 12.6 percent.
Despite the higher inflows, the surge in repayment obligations meant that a large share of the foreign assistance received went straight into servicing outstanding loans, leaving limited fiscal space for new or ongoing development projects.
The rise in debt servicing comes at a time when the government is already grappling with lower revenue collection, high inflation, and slow project execution.
Experts warn that if the trend persists, Bangladesh may struggle to fund development without fresh borrowing.
"It's a good sign that foreign loan commitments and disbursements have picked up," said Ashikur Rahman, principal economist at the Policy Research Institute (PRI) of Bangladesh.
This indicates that development partners are re-engaging as project activities normalise, he said.
However, foreign debt servicing continues to climb as the overall stock of external borrowing has grown.
"Export earnings and remittances are still helping to maintain balance, but concessional loans are declining, and many older projects have entered their repayment phase, adding to the pressure," he said.
Rahman noted that repayments are not a concern for now, but if the current trend persists, the burden may rise even with stable exports.
Still, he said, the increase in disbursements is a positive signal for the economy.
