Bangladesh's foreign funding gap widens as loan disbursement falls 29%

Six-month foreign aid commitments fall to $1.99 billion from $2.30 billion a year earlier

Bangladesh’s foreign loan and grant disbursements fell by 29 percent year-on-year in the first six months of the 2025–26 fiscal year, even as the government stepped up repayments to development partners.

Between July and December, development partners and international lenders disbursed $2.50 billion in loans and grants, down from $3.53 billion in the same period a year earlier, according to data released on Wednesday by the Economic Relations Division (ERD).

The slowdown marks a sharp reversal from the early months of the fiscal year. In the first five months alone, foreign disbursements had actually risen 26 percent, reaching $1.95 billion, compared with $1.57 billion a year earlier.

At the beginning of the previous fiscal year, which started amid political turmoil, a negative trend was evident across various economic indicators, and its impact was also reflected in this indicator.

Foreign aid commitments also declined in the first six months of the current fiscal year. The commitments totalled $1.99 billion in the first six months, down from $2.30 billion in the same period of the previous fiscal year—a decline of 13.42 percent.

According to the ERD report, the government repaid $2.19 billion of its dues to financing institutions in the first six months of the current fiscal year.

In the first six months of the previous fiscal year, repayments of principal and interest totalled $1.9817 billion. Accordingly, debt repayment increased by 10.76 percent.