Debt servicing outpaces foreign aid inflow in first seven months

Bangladesh pays $267.68mn in debt servicing against $264.16mn in aid receipts through January

Bangladesh’s foreign debt servicing has outpaced the inflow of overseas aid in the first seven months of the current fiscal year, reflecting a growing strain on the country's economy.

According to the latest data released by the Economic Relations Division (ERD) on Thursday, development partners and international lending agencies disbursed $2.64 billion in loans and grants between July and January of the 2025-26 fiscal year.

During the same period, the government had to pay out $2.67 billion to cover the principal and interest on existing foreign debts.

The figures highlight a sharp decline in aid inflow compared with the previous 2024-25 fiscal year, when disbursements reached $3.93 billion during the same seven-month window.

The current trend suggests that while debt repayment pressures are mounting, the actual release of committed funds has slowed significantly.

The negative trajectory across different economic indices, which began during the political unrest in July 2024, has continued to impact the fiscal landscape under the subsequent administrations.

Foreign aid commitments have also seen a marginal dip.

In the first seven months of the current financial year, Bangladesh secured $2.27 billion in new aid pledges, down from $2.35 billion during the corresponding period last year.