The first seven months (July-January) of the current 2025-26 fiscal year have seen a major change in the country’s external debt flow. During this time, more money was spent on interest payments than the amount of money released by development partners to Bangladesh. This is the first time that the amount of installment payments has exceeded the amount of loans received from development partners.

This picture emerged in the latest updated report published by the Economic Relations Department (ERD) on Thursday (February 26).

The report shows that development partners disbursed $2.641 billion during July-January. In contrast, during the same period, Bangladesh repaid $2.676 billion to development partners, including principal and interest on various loans taken earlier. That is, the amount repaid was about $35 million more than the amount received or disbursed.

Foreign debt relief has decreased by 32.39 percent in the first seven months of the current fiscal year compared to the same period last fiscal year. Last year, relief was $3.938 billion during the same period. However, debt repayments increased by 10 percent compared to last year. Bangladesh repaid $2.418 billion in the first seven months of last year.

The report shows that new commitments or signings of agreements from development partners have
decreased in the first seven months of the current fiscal year. New commitments of $2.274 billion were received in the July-January period, compared to $2.350 billion in the same period last year. This is 3.26 percent less than last year.

The pace of commitments slowed down in the last fiscal year due to a crisis of trust among development partners due to the student uprising, the fall of the government, and instability in the administration. However, this flow is expected to increase as the elected government takes office.

ADB has more commitments, Russia leads in disbursements
ADB has made the most commitments in the last 7 months. During this period, the organization has pledged a loan of 1.269 billion US dollars. Next is the World Bank with 265 million US dollars. During this period, AIIB, Japan, India, China, and Russia have not pledged new loans. However, Russia has disbursed 576 million US dollars in the last 7 months. In addition, ADB has disbursed 536, World Bank 555, China 220, and Japan 183 million US dollars.