Foreign loan inflows into Bangladesh are declining while debt-servicing liabilities continue to climb.
Amid this recent trend, loan disbursements between July and September of the current financial year dropped by 42.34 percent compared with the same period of the previous fiscal year.
In the first quarter, foreign loan disbursements stood at $662.3 million, down from $1.15 billion recorded during the corresponding period of the 2025–26 financial year.
Economist Zahid Hussain warned that this widening gap between falling disbursements and rising repayments is set to heighten pressure on the national economy.
According to a report released on Monday by the Economic Relations Division (ERD), the country spent $1.35 billion on principal and interest repayments for past loans during the first quarter of the 2026-27 financial year -- more than double the amount received in fresh disbursements.
In percentage terms, repayments exceeded disbursements by 104.03 percent.
Meanwhile, analysts expressed concern that major development partners -- including the World Bank, the Asian Development Bank (ADB), alongside bilateral lenders India, China, and Russia -- made no new lending commitments during these three months.
The Asian Infrastructure Investment Bank (AIIB) also made no fresh loan commitments during the first quarter.
The absence of fresh commitments means that no new development projects funded by these three multilateral lenders and three partner countries were finalised in the opening quarter.
However, while pausing new pledges, all six development partners have continued disbursing funds against previously approved loans.
Zahid, former lead economist at the World Bank’s Dhaka office, noted that this sharp escalation in debt servicing had been anticipated.
"It was evident earlier that foreign debt repayments would rise, and we are seeing that unfold now," he told bdnews24.com. "The grace periods on large loans taken in the past for mega projects and budget support have ended.
“As a result, the repayment burden is climbing steadily, which could intensify strain on the economy in the coming years."
Eight months into the tenure of the new administration, the economic slowdown persists.
Against this backdrop, Zahid stressed that external borrowing remains critically needed, advising that it should ideally arrive as budget support.
Explaining his view, he said: "The government currently needs cash dollars, which is why greater emphasis must be placed on budget support.
“When foreign assistance is tied to specific projects, the funds are released only during procurement, which consumes considerable time.
“In contrast, budget support arrives immediately upon approval. It is therefore the most effective vehicle to bolster dollar inflows."
He added: "Foreign exchange reserves are currently in a satisfactory position, but that comfort will disappear once imports pick up.
“The government must now concentrate on securing low-interest external loans."