Foreign loan disbursement drops 20% in 11 months of FY25, repayments up 23%

Fresh commitments also fall 31 percent amid tighter spending and delayed projects

With sluggish project execution and tighter fiscal controls in play, Bangladesh has seen a steep drop in foreign loan disbursements, while repayments on earlier debt have risen markedly.

According to the latest report by the Economic Relations Division (ERD), disbursements between July and May fell by 20 percent year-on-year.

Over the same period, repayments--including both principal and interest--climbed by 23 percent.

Total foreign loans received in this period stood at $5.6 billion, down from $7.02 billion a year earlier.

The interim government has tightened fiscal controls to reduce the budget deficit by cutting the number of approved projects and closely reviewing funding allocations.

The ERD officials say these measures have lowered project implementation costs and reduced the demand for foreign financing.

Despite lower inflows, the caretaker administration paid back $3.78 billion in foreign debt during the same period--equivalent to Tk 456.7 billion.

Of that, $2.38 billion was in principal and $1.40 billion in interest.

In the same period last year, repayments totalled $3.07 billion or about Tk 338.97 billion.

Fresh foreign loan commitments dropped 31 percent, with Bangladesh securing $5.49 billion in pledges from July to May, down from $7.93 billion in FY2024.