Foreign loan disbursement to Bangladesh plunged nearly 48 per cent year-on-year in the first quarter of the current fiscal year, even as development partners increased their funding commitments, while the country’s debt-servicing burden continued to rise.
Development partners disbursed $541.74 million in loans during July-September of FY2026-27, down from $1,038.12 million in the same period of FY2025-26, according to provisional data published in the Economic Relations Division’s (ERD) Foreign Assistance Monthly Report for July-September 2026.
Total foreign assistance disbursement, including grants, fell to $662.31 million from $1,148.59 million in the corresponding quarter a year earlier.
The decline in actual disbursement came despite a rise in commitments from development partners.
Total foreign assistance commitments increased to $1.27 billion in the first quarter of FY27 from $910.67 million in the same period of the previous fiscal year.
Loan commitments rose to $1.15 billion from $821.70 million, while grant commitments increased to $125.45 million from $88.97 million.
Project assistance accounted for the entire volume of foreign aid commitments during the period, as no food assistance was committed in either of the two comparable quarters.
Project aid falls
Disbursement of project assistance, including loans and grants, totalled $652.31 million in July-September of FY27, down from $1.14 billion in the same period of the previous fiscal year.
Of the amount disbursed in the first quarter of FY27, $541.74 million came in loans and $110.57 million in grants.
Food assistance disbursement remained unchanged at $10 million in both periods, entirely in the form of grants.
The contrasting trends in commitments and disbursements indicate that higher pledges from development partners have yet to translate into increased fund releases.
The figures, however, do not specify the reasons behind the sharp year-on-year decline in disbursement.
Debt-servicing pressure mounts
Meanwhile, Bangladesh’s payments against foreign loans increased during the first quarter of FY27, adding to the pressure on external financing.
The country paid $1.35 billion in principal and interest on foreign loans during July-September, compared with $1.28 billion in the same period of FY26.
Principal repayments rose to $858.92 million from $816.99 million, while interest payments increased to $492.31 million from $462.96 million.
In local currency, total debt servicing reached Tk16,646.46 crore in the first quarter of FY27, up from Tk15,591.69 crore a year earlier.
Of the total amount paid, Tk10,584.62 crore went towards principal repayments and Tk6,061.84 crore towards interest.
The latest figures highlight the widening gap between foreign assistance commitments and actual disbursements, alongside rising debt-servicing obligations.
While development partners committed more funds during the quarter, Bangladesh received substantially less in loan disbursements and had to spend more on repaying existing foreign debt.
The figures are provisional and were published in the ERD’s Foreign Assistance Monthly Report for July-September 2026.