Foreign financing to Bangladesh registered a sharp decline of 19 per cent in the first nine months of the current fiscal year 2025–26 (July–March), reflecting sluggish implementation of externally funded development initiatives and weaker inflows from development partners.
According to provisional figures released by the External Resources Division (ERD) yesterday, the government received $3.89 billion in foreign loans during the period, compared with $4.80 billion in the corresponding months of the previous fiscal year. Officials attribute the downturn primarily to delays in executing foreign-assisted projects under the Annual Development Programme (ADP), which continues to underperform relative to targets.
Data from the Implementation Monitoring and Evaluation Division under the Ministry of Planning shows that ADP implementation stood at 34.56 per cent during July–March FY26, marginally lower than 35.8 per cent recorded a year earlier. The persistent execution gap has reportedly affected disbursement schedules from key development partners.
Despite the overall decline in inflows, Russia remained a significant lender during the period, disbursing $828 million in project and programme assistance.
At the same time, the country’s external debt servicing obligations continued to rise. Bangladesh repaid $3.52 billion in principal and interest during July–March FY26, marking a 9 per cent increase from $3.21 billion in the same period of the previous fiscal year. Of the total repayments, $1.24 billion was accounted for by interest payments, indicating a growing cost burden on external borrowing.
Commitments from both multilateral and bilateral development partners also weakened during the review period. Total new commitments stood at $2.80 billion, reflecting a 6.6 per cent year-on-year decline. Notably, all commitments during the period were structured as project assistance, with no significant budgetary support recorded.
Key External Financing Indicators (Jul–Mar FY26 vs FY25)
| Indicator | Jul–Mar FY26 | Jul–Mar FY25 | Change |
|---|---|---|---|
| Foreign loan disbursement | $3.89 billion | $4.80 billion | -19% |
| ADP implementation rate | 34.56% | 35.8% | -1.24 ppt |
| Debt servicing | $3.52 billion | $3.21 billion | +9% |
| Interest payments | $1.24 billion | — | — |
| New commitments | $2.80 billion | ≈ $3.00 billion | -6.6% |
Economists suggest that the combination of slower project execution, rising repayment obligations, and subdued new commitments could tighten fiscal space further if corrective measures are not taken. They emphasise that accelerating implementation capacity and streamlining procurement processes will be critical to reversing the downward trend in external financing flows.
The latest figures highlight a structural challenge: while Bangladesh continues to rely on foreign-funded development projects for infrastructure and growth, the pace of utilisation and absorption remains insufficient to sustain higher disbursement levels.
