Foreign aid dips 26% as debt servicing climbs in Bangladesh

The government paid $2.90 billion in principal and interest on existing foreign debts, official data shows

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Foreign aid disbursement to Bangladesh fell by 26 percent year-on-year during the July-February period of the current 2025-26 fiscal year, according to the Economic Relations Division (ERD).

Development partners and international lending agencies released $3.05 billion in loans and grants during this eight-month window, the ERD said in a report published on Monday..

This marks a sharp decline from the $4.13 billion disbursed during the same period in the previous fiscal year.

While the inflow of funds slowed, the burden of repayment continued to climb.

Between July and February, the government paid $2.90 billion in principal and interest on existing foreign debts.

In contrast, debt servicing stood at $2.64 billion during the corresponding months of the last fiscal year.

Economists and ERD officials attribute the slowdown to lingering economic instability following the political transition in 2024.