Foreign loan commitments to Bangladesh have dropped sharply by 67.22% in the first seven months of the 2024-25 fiscal year (FY25), according to data released by the Economic Relations Division (ERD). From July to January 2024, Bangladesh received approximately $2.35 billion in loan commitments, down from $7.17 billion during the same period in the previous fiscal year.
The decline in loan commitments comes as the interim government adopts a more cautious approach to signing new foreign loan agreements. ERD officials noted that several projects initiated by the previous Awami League government have been canceled, contributing to the reduced loan commitments.
Loan disbursements also experienced a decrease, falling by 10.65% during this period. A total of $3.94 billion was disbursed in loans, compared to $4.40 billion in the same period of FY24. The drop in disbursements further reflects the cautious stance adopted by the government, alongside challenges in project implementation, including contractor withdrawals and delays in appointing new project directors.
On the other hand, repayments of foreign loans have seen a notable increase. Bangladesh repaid a total of $2.41 billion in principal and interest during the July-January period, a rise from $1.86 billion in the previous year. Principal repayments rose to $1.54 billion from $1.10 billion, while interest payments increased to $874 million from $760.74 million in FY24.
The decline in loan commitments and disbursements is also attributed to a slowdown in the implementation of foreign-financed projects, largely due to political instability following recent unrest in the country. The interim government’s review of proposed foreign loan projects has further slowed the pace of new agreements being signed.
Despite the overall decrease in foreign loans, the World Bank emerged as the largest disburser, contributing $944.50 million. The Asian Development Bank (ADB) followed with $700 million, while Japan provided $252.12 million, and the Asian Infrastructure Investment Bank (AIIB) contributed $160 million.
Notably, the three major development partners—China, India, and Russia—have yet to make any loan commitments to Bangladesh during the first seven months of FY25, marking a stark contrast to previous years.