Bangladesh’s foreign debt has surpassed $4 billion for the first time in the 2024-25 fiscal year, according to a report published by the Economic Relations Division (ERD).
Between July and February of this fiscal year, the country received a total of $4.13 billion in foreign loans, with the majority of disbursements coming from institutions such as the Asian Development Bank (ADB), the World Bank, and Japan.
However, the country also faced a significant repayment burden, with nearly $2.64 billion in loan repayments made during the same period.
The ERD's update on foreign loan disbursements and repayments for the first eight months of the fiscal year reveals a growing debt situation, with the government having to pay back a total of $264 million in principal and $95 million in interest.
Notably, this represents a sharp increase from the same period last year, when the repayment total was $203 million — a rise of $61 million in just one year.
The bulk of Bangladesh’s foreign loans during this period came from the ADB, which provided $1.13 billion; World Bank followed with $960 million in disbursements, while Japan contributed $730 million.
ERD report indicates that the loan situation improved in December, January, and February, due to the higher-than-usual disbursements during these months.
Despite these disbursements, foreign debt remains a growing concern for Bangladesh, as repayments continue to outpace new borrowings in recent months.
In addition, the country’s foreign debt repayment has increased substantially over the years. In the previous fiscal year, Bangladesh paid back $3.36 billion in foreign debt, marking a threefold increase in repayments over the past decade.
Decline in Loan Commitments: One worrying trend highlighted in the ERD’s report is the sharp decline in loan commitments from foreign development partners.
Between July and February of this fiscal year, Bangladesh received only $2.35 billion in loan commitments, a dramatic drop from the $7.2 billion in commitments during the same period last year.
This drop reflects a one-third reduction in foreign aid commitments, with major countries like China, India, and Russia providing no new pledges.
The government’s increasing foreign debt obligations and the corresponding decline in international loan commitments pose significant challenges to the country's financial stability and its ability to fund development projects without incurring further debt.
Growing Debt Burden: As foreign debt continues to accumulate, the pressure on Bangladesh’s economy grows.
With repayment obligations swelling, the government must balance its foreign loan commitments with its capacity to meet these demands without jeopardising national development goals.
Experts are concerned about the long-term impact of rising foreign debt and urge the government to explore alternative financing strategies, as well as domestic revenue sources, to ease the burden on the economy.
