Written by The Banking Post
Bangladesh is paying more to service its external debts than it is receiving in new foreign aid commitments, signaling mounting pressure on the country’s external financing position in the early months of FY26.
Official data from the Economic Relations Division (ERD) show that the government repaid $1.58 billion between July and October. During the same period, development partners pledged just $1.21 billion in fresh assistance — a gap driven largely by rising repayments of both interest and principal.
Of the total repayments, $1.02 billion went toward principal, while $560.87 million covered interest obligations. This uptick comes as earlier loans with shorter grace periods and higher financing costs begin to mature.
Despite the slowdown in new commitments, aid disbursements strengthened, reaching $1.66 billion in the first four months of FY26 — up by $462.91 million from a year earlier. The bulk of these disbursements came as loans ($1.55 billion), alongside $111.71 million in grants.
An ERD official said disbursement momentum improved in October as project implementation accelerated. “We hope to meet the annual target by the end of the fiscal year,” the official said.
Among major development partners, the World Bank and Russia led disbursements, releasing $405.24 million and $407.78 million, respectively. They were followed by the Asian Development Bank ($248.81 million), China ($194.01 million) and Japan ($80.09 million).
The government has set an ambitious foreign aid disbursement goal of $9.22 billion for FY26. In comparison, development partners released $8.57 billion in FY25, according to ERD figures.
