Bangladesh’s external debt servicing burden rose sharply at the start of the new fiscal year, reflecting growing repayment pressures even as inflows of fresh loans from development partners slowed.
Provisional data released by the Economic Relations Division (ERD) show that the country repaid $446.68 million in July, the first month of the 2025–26 fiscal year. This marks a 16 percent increase from $385.67 million repaid during the same month of the previous fiscal year.
The surge was driven primarily by a steep rise in principal repayments. In July FY26, Bangladesh cleared $327.72 million in principal amounts, compared with $264.88 million a year earlier — a 24 percent jump. In contrast, interest payments registered a modest decline, falling slightly to $118.96 million in July this year from $120.79 million in July FY25.
In terms of local currency, the external debt servicing obligation amounted to Tk 5,448 crore in July, significantly higher than Tk 4,548 crore recorded during the same period last year, underlining the growing pressure on the budget and reserves.
While repayments surged, foreign aid inflows slowed noticeably. Bangladesh received only $202.75 million in project assistance in July 2025, which is 43 percent lower than the $358.32 million disbursed in the corresponding month a year earlier. This sharp decline in aid disbursement indicates weaker external financing support at a time when repayment commitments are rising.
New aid commitments also remained modest. According to ERD data, development partners pledged just $83.46 million in fresh assistance during July 2025, almost entirely in the form of loans. This was higher than the $16.40 million pledged in July 2024 but still a relatively small volume compared to Bangladesh’s growing financing needs.
The data suggest that Bangladesh is entering FY26 with a widening gap between external debt obligations and fresh loan inflows, a dynamic that could intensify pressure on the balance of payments in the coming months.