Highlights:
Foreign loan commitments rise 133% year-on-year
$1.22b pledged July–November FY26
Disbursements reach $1.94bn in five months
Bangladesh repays $1.89b in foreign loans July-November
Foreign loan commitments from development partners rose sharply by 133% to $1.219 billion in the first five months of the current 2025-26 fiscal year, while disbursements rose by 26.3% to $1.96 billion, according to the latest data from the Economic Relations Division (ERD).
Between July and November of the last fiscal year, commitments stood at only $522.68 million and disbursements at $1.543 billion.
The ERD report, released today (29 December), also shows that Bangladesh’s foreign loan repayments during the period were almost equal to the amount disbursed. Bangladesh repaid $1.89 billion, covering both principal and interest on various foreign loans.
Data indicate that while aid inflows are rising, the near balance between disbursement and repayment continues to limit net foreign financing gains.
According to ERD officials, foreign loan commitments had remained low last fiscal year due to political upheaval, administrative instability and a crisis of confidence among development partners. With the situation improving, commitments are now picking up.
Foreign debt repayments have been rising steadily as the grace periods for loans taken by the government in previous years for various development projects and budget support have come to an end, they said.
Economists said that the foreign debt situation in the coming months will largely depend on the political environment. With an election ahead, uncertainties remain over whether it will be held in a free and credible manner and whether all political parties will accept the outcome. This uncertainty is already influencing business and investment decisions.
The international community wants an inclusive and acceptable election in which all parties participate and accept the results. This remains a major challenge for Bangladesh.
Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh, said the first five months of last fiscal year coincided with a phase of political transition, when a change in government and policy uncertainty led development partners to scale back new commitments and project approvals. This year, that situation has improved to some extent.
Following the political change, the interim government has taken a comparatively stronger position on fiscal management, foreign borrowing and development spending. In other words, greater clarity has emerged in the fiscal policy and foreign aid management, he said.
Masrur added that many development partners are still waiting for the election outcome closely, as they are likely to decide on approving new projects and increasing commitments through discussions with the new policy-making team once a stable, elected government takes office.
ERD officials said Bangladesh has taken several large loans in the past. As the grace periods for many of these projects have ended, principal repayments have begun, causing foreign debt repayments to rise steadily – a trend that is expected to continue in the future.
Bangladesh repaid $1.215 billion in principal and $674.62 million in interest on foreign loans in the first five months of FY26, up from $1.055 billion and $655.10 million respectively a year earlier, according to ERD data.
Between July and November, the highest aid commitment of $581.71 million came from the Asian Development Bank (ADB), while the World Bank pledged $18.44 million.
During the same period, Russia disbursed the largest amount, providing $552.86 million, mainly for the Rooppur Nuclear Power Project. The World Bank disbursed $428.93 million, followed by ADB ($335.36 million), China ($194 million), Japan ($88.81 million), and India ($86.77 million).