Bangladesh repays record $4.49bn in foreign debt, fresh loans slow

Bangladesh repaid a record US$4.49 billion in external debt during the 2025–26 fiscal year, even as fresh foreign loan commitments and disbursements fell sharply amid slower implementation of development projects, according to the latest data from the Economic Relations Division (ERD).

The repayment, equivalent to about Tk 54,957 crore, was US$400 million higher than the US$4.09 billion repaid in the previous fiscal year.

ERD figures released on Sunday showed that US$2.95 billion of the total repayments went toward principal, while US$1.54 billion was paid as interest. In FY2024–25, Bangladesh repaid US$2.60 billion in principal and US$1.49 billion in interest.

Despite the record repayments, foreign financing slowed noticeably during the fiscal year.

External loan disbursements fell to US$8.07 billion, down from US$8.56 billion a year earlier, representing a decline of US$490 million.

New loan commitments also dropped significantly. Development partners pledged US$5.24 billion in fresh financing during FY2025–26, compared with US$8.32 billion in the previous year—a decrease of US$3.08 billion.

An ERD official attributed the decline in foreign financing largely to weaker demand for development funds as implementation of the Annual Development Programme (ADP) slowed.

Since most external borrowing is linked to ADP-funded infrastructure and development projects, reduced project execution led to lower loan disbursements and fewer new financing commitments, the official said.

Data from the Implementation Monitoring and Evaluation Division (IMED) showed that ADP implementation stood at just 67.52 per cent in FY2025–26, the lowest rate recorded in two decades.

Against a revised ADP allocation of Tk 208,935.53 crore, actual spending reached Tk 141,072 crore, leaving nearly Tk 68,000 crore unutilised.

The World Bank was Bangladesh's largest source of external loan disbursements during the fiscal year, releasing nearly US$2.07 billion.

The Asian Development Bank (ADB) followed with approximately US$1.91 billion, while Russia disbursed US$1.04 billion, Japan US$790 million, the Asian Infrastructure Investment Bank (AIIB) US$690 million, China US$530 million, and India US$270 million.

In terms of new commitments, the ADB led with US$2.68 billion, followed by the World Bank at US$820 million. The AIIB pledged US$250 million, while Japan and China committed US$310 million and US$270 million, respectively.

The latest figures highlight growing pressure on Bangladesh's external debt servicing obligations at a time when inflows of new concessional financing are slowing alongside weaker development spending.