Bangladesh’s foreign loan disbursement declines again in July

Debt repayments in July have exceeded fresh inflows, marking a continuing trend since last fiscal year’s unrest-hit slowdown

Foreign loan disbursements to Bangladesh have dropped sharply in July, the first month of the 2025-26 fiscal year, extending a decline that began amid last year’s quota reform unrest and economic slowdown.

According to data released by the Economic Relations Division (ERD) on Thursday, only $208.3 million came in during July, down 43.5 percent from $358.3 million received in the same month a year earlier.

In July 2024, disbursements had already fallen 11.5 percent year-on-year amid the unrest.

Repayments, however, far outpaced fresh inflows. Bangladesh paid over $446.6 million in July, including $327.7 million in principal and $118.9 million in interest. This was up from $385.6 million repaid in July 2024, marking a 16 percent increase in debt servicing costs within a year.

ERD figures also show that pledges of foreign loans and grants totalled $83.4 million in July, compared with just $16 million a year earlier. But actual disbursements were higher in previous years: $405.7 million in July 2023 and $488 million in July 2022.

The trend of repayments exceeding disbursements began in the 2023-24 fiscal year, breaking with the usual pattern where inflows outpace debt service obligations. That year, Bangladesh received $8.57 billion in foreign loans, down from $10.28 billion the year before, while repayments surged to $4.09 billion, including $2.60 billion in principal and $1.49 billion in interest.