Bangladesh has seen a sharp decline in foreign loan commitments, dropping by 67.22% in the first seven months of the current fiscal year 2024-25, as the interim government re-evaluates its borrowing strategy and reassesses projects inherited from the previous administration, according to data from the Economic Relations Division (ERD).
Between July and January 2024, the country secured only $2.35 billion in foreign loan commitments, a significant drop from the $7.17 billion received during the same period in the previous fiscal year.
The slump in loan commitments reflects the government’s cautious approach toward signing new agreements. ERD officials revealed that several projects initiated under the Awami League government have been scrapped, contributing to the reduction.
Loan disbursements also fell by 10.65% during this period, with $3.94 billion disbursed compared to $4.40 billion in FY24. Apart from policy shifts, implementation challenges—such as contractor withdrawals and delays in appointing new project directors—further slowed fund utilization.
Meanwhile, repayments of foreign loans surged. Bangladesh paid back $2.41 billion in principal and interest between July and January, up from $1.86 billion in the same period last year. Principal repayments increased to $1.54 billion from $1.10 billion, while interest payments rose to $874 million from $760.74 million in FY24.
The downturn in loan commitments and disbursements is also linked to a slowdown in the execution of foreign-funded projects, driven by political uncertainty following recent unrest. Additionally, the interim government’s review of proposed foreign loans has further delayed new agreements.
Despite the overall decline, the World Bank remained the largest disburser, providing $944.50 million, followed by the Asian Development Bank (ADB) with $700 million. Japan contributed $252.12 million, while the Asian Infrastructure Investment Bank (AIIB) disbursed $160 million.
Notably, three major development partners—China, India, and Russia—have yet to make any loan commitments to Bangladesh in the first seven months of FY25, a stark contrast to previous years.
Bd-pratidin English/ Jisan
