Bangladesh’s foreign loan disbursements nearly halved in the first quarter of the current fiscal year as repayments of principal and interest more than doubled the amount of fresh funds received, while most major development partners made no new loan commitments.
The country received around $660 million in foreign loans in July-September, down from $1.15 billion in the same period a year earlier, according to the latest data from the Economic Relations Division (ERD), released on Monday.
During the three months, Bangladesh repaid around $1.35 billion in principal and interest on earlier loans, more than twice the amount of foreign loans disbursed.
The figures highlight the growing pressure of external debt servicing on the country’s finances at a time when fresh foreign financing remains subdued.
The World Bank, the Asian Development Bank (ADB), China, Russia and India made no new loan commitments during the quarter, the ERD data showed. Japan was the only major development partner to pledge a new loan, worth $3.5 million.
However, the absence of fresh commitments did not prevent the major lenders from releasing funds against loans agreed upon earlier.
The World Bank was the largest source of foreign loan disbursements during the quarter, providing $196.5 million. The ADB followed with $162.1 million, while India disbursed $105 million.
Russia released $20 million and China $15 million during the period.
Bangladesh received $1.27 billion in new foreign loan commitments from all development partners combined during the quarter, according to the ERD data.
The subdued lending commitments come as Prime Minister Tarique Rahman is visiting Japan, where Bangladesh is expected to sign investment agreements worth around $14 billion over the next five years.
While the proposed investment agreements could strengthen economic ties between the two countries, investment commitments are distinct from sovereign loan pledges and do not necessarily translate into immediate budgetary financing.
The sharp fall in loan disbursements, alongside rising debt repayments, underscores the importance of securing timely financing for development projects and managing the country’s external debt obligations.