Written by The Banking Post
The government spent a large sum on foreign debt repayments in the very first month of the new fiscal year, with repayments far outstripping fresh inflows.
According to the Economic Relations Division (ERD), Bangladesh received $202.44 million in loan disbursements in July. But in the same month, it had to pay back $446.68 million, including both principal and interest—more than twice the amount disbursed.
The ERD data shows that in July, the government repaid $327.72 million in principal and $118.96 million in interest to development partners.
Officials said Bangladesh has taken on a large volume of external loans in recent years, many of them carrying strict conditions. Some loans come with higher interest rates and shorter maturities, while several grace periods have already ended, intensifying repayment pressure.
ERD projections suggest that external debt repayments could reach around $5 billion by the end of FY26, compared to $4.09 billion settled in the previous fiscal year.
Economists warn that rising debt dependency is squeezing fiscal space for new development projects while adding pressure on foreign exchange reserves.
