Foreign aid disbursement falls 42 percent as debt repayments top $1.35 billion

Foreign development assistance disbursed to Bangladesh has fallen, while the pressure of repaying earlier loans has risen. In the first three months of the current 2026-27 fiscal year, from July to September, Bangladesh received $662.3 million in loans and grants combined from development partners.

In the same period of the previous fiscal year, the amount of such loans and grants received was $1,148.5 million. On that comparison, disbursement has fallen by $486.2 million in a year, a drop of 42 percent.

Yet in the same period the government had to repay $1,351.3 million in principal and interest on old loans — more than twice the amount that came in during those three months.

The picture emerges from the foreign assistance report published on Monday by the Economic Relations Division (ERD). The report shows that alongside the fall in disbursement, the amount of debt repayment has also risen.

As a result, more money is having to be spent meeting old obligations than can be invested in projects with new financing.

According to ERD data, in the first quarter of the current fiscal year Bangladesh repaid $860 million in principal on foreign loans and about $491.3 million in interest.

In Bangladeshi currency, the total repayment amounts to Tk 16,646.46 crore.

In the same period of the previous fiscal year, $1,279.9 million was repaid in principal and interest. On that basis, debt repayment has risen by about $71.4 million in a year.

Meanwhile, $662.3 million was disbursed as project assistance in the first three months of the current fiscal year. Of that, $541.7 million was loans and $120.5 million was grants.

In the same period of the previous fiscal year, project assistance disbursement was $1,148.5 million. The flow of foreign financing into development projects has therefore fallen markedly this time.

Although disbursement fell, new loan and grant commitments rose. In the July-September period Bangladesh received commitments of $1,273 million from development partners, compared with $910.6 million in the same period of the previous fiscal year.

The new commitments comprised $1,147.5 million in loans and $125.4 million in grants — an increase in commitments of $362.4 million.

However, no new loan commitments came from the major development partners. The World Bank, the Asian Development Bank (ADB), China, Russia and India gave no new loan commitments in this period. Among the major partners, only Japan committed to a $3.5 million loan.

Even without new commitments, several major development partner countries and agencies continued disbursements under earlier agreements. In the first three months the World Bank disbursed $196.5 million.

The ADB gave $162.1 million. India provided $105 million. Russia disbursed $20 million and China $15 million.

As food assistance, $10 million was disbursed in the first three months of the current fiscal year, the same as in the same period of the previous fiscal year. No new commitment was received in this sector.