Credit commitments made by overseas development partners have plunged by 91 percent in the first five months of fiscal year 2024-25 compared with the same period last year.
In addition, the disbursement of foreign loans has dropped by 27 percent.
The Economic Relations Division, or ERD, says the government secured loan and aid commitments amounting to $5.86 billion during July-November of FY 2023-24.
In the same period of the current fiscal year, it received commitments of $52.26 million, a 91 percent decrease compared with the previous year's figures.
A loan is considered a commitment once discussions are finalised and agreements are signed with the development partner, funding country, or international organisation.
The ERD's latest data shows that during the first five months of this fiscal year, the government was able to secure $1.54 billion in foreign loan disbursements, compared with $2.11 billion during the same period last year.
This represents a decrease of $ 573.2 million or 27 percent.
Zahid Hussain, a former lead economist at the World Bank's Dhaka office, told bdnews24.com: "The current fiscal year is exceptional in many ways. Economic activities were stalled during the first two to three months.
"Foreign loans primarily come around project implementation. There is always slow progress at the start of the fiscal year. The momentum this year has further slowed due to the impact of the July-August protests."
ERD data shows that the government repaid a total of $1.71 billion, including principal and interest, during the same period.
This is $160 million (11 percent) more than the amount disbursed in foreign loans.
Typically, the amount of loan repayment is lower than the disbursement.
The trend was similar in the last two fiscal years as well.
The economist explained that this year's situation is different, as the foreign loans previously taken were not used effectively, and the government is not receiving the expected returns.
"A power plant was built with financing from the Asian Development Bank, but it is now idle due to a lack of gas. The Karnaphuli Tunnel, funded by a loan from China, is also not generating returns," Zahid said.
He added, "The interim government must now reconsider all projects. It's not just about taking loans; careful attention must also be paid to how they are utilised." —bdnews24.com
