Debt payments surpass foreign loan inflows

Bangladesh's foreign debt flow has seen a significant shift in the first seven months of the 2025-26 fiscal year (July-January), with debt repayments now exceeding new loan inflows from development partners.

According to the latest report from the Economic Relations Division (ERD), the country received $2.641 billion in loans during this period, while it paid $2.676 billion in principal and interest - about $35 million more than the amount received. This marks the first time repayments have surpassed new inflows.

The report shows that foreign loan disbursements have fallen 32.4 per cent compared to the same period last year, when $3.938 billion was received. 

Meanwhile, repayments have risen 10%, from $2.418 billion last year to $2.676 billion this year.

New loan commitments have also declined slightly, by 3.26 per cent, from $2.350 billion last year to $2.274 billion this year. 

Analysts say the slowdown in commitments last year was linked to political instability, including the student uprising and government transitions. Inflows are expected to improve as the new government consolidates power. 

Among development partners, ADB made the largest new commitments ($1.269 billion), followed by the World Bank ($265 million). Russia, Japan, China, and India did not announce new loans, although Russia disbursed $576 million. Other major disbursements include ADB $536 million, World Bank $555 million, China $220 million, and Japan $183 million.

The data highlights the growing pressure of debt repayment on the country's finances and underscores the need for careful fiscal planning in the coming months.