Bangladesh’s external financial accounts faced heightened pressure during the first two months of the current financial year, as debt servicing obligations substantially outpaced foreign aid inflows. According to updated figures released by the Economic Relations Division (ERD), the country repaid more than double the amount of foreign assistance it received between July and August.

During the July–August period, development partners and bilateral creditors disbursed 29.45 million US dollars ($294.5 million) in foreign aid. In contrast, the government expended 698.9 million US dollars ($69.89 crore) on servicing existing debt, meaning repayments exceeded fresh inflows by 237 per cent.

Inflows during the two-month period dropped sharply, reaching only 40 per cent of the 750 million dollars recorded during the same period in the previous financial year. The entirety of the funds received this year was allocated as project aid. Among the key multilateral and bilateral partners, the Asian Development Bank (ADB) was the largest contributor, releasing 128.7 million dollars. The World Bank followed with 73.9 million dollars, while Japan disbursed approximately 40 million dollars.

Concurrently, external debt obligations have escalated steadily over recent years. Of the nearly 700 million dollars spent on servicing debts in July and August, 516 million dollars went towards principal repayments, while 182.8 million dollars covered interest charges. This reflects a noticeable increase from the corresponding period last year, when total debt servicing stood at roughly 670 million dollars.

Fresh borrowing commitments remained sluggish during the same timeframe. The government secured only 240 million dollars in foreign credit commitments for July and August, matching the figure registered during the equivalent period in the previous year.

This growing divergence between disbursements and repayments underscores broader economic challenges facing the nation. Shrinking foreign assistance combined with rising debt obligations exerts significant pressure on foreign exchange reserves and fiscal policy, leaving policymakers with a tightening margin to fund vital infrastructure and development initiatives.