Bangladesh's foreign debt servicing rose approximately 26% to $3.36 billion in FY24, according to the latest report from the Economic Relations Division (ERD) published on Sunday.
This increase is bolstered by a record 44% rise in interest payments, which reached nearly $1.35 billion, driven by a significant rise in borrowing costs.
Principal repayments are rising as the grace periods for loans taken for various mega projects end.
Additionally, high interest rates have increased the pressure on debt servicing, according to ERD sources.
Bangladesh paid development partners $2.67 billion – $1.73 billion in principal and $935.66 million in interest in FY23.
In FY24, principal and interest payments increased to $2 billion and $1.34 billion, respectively.
Approximately 75% of Bangladesh's loans from the Asian Development Bank are market-based.
The country also borrows from the Asian Infrastructure Investment Bank (AIIB) at market-based interest rates and, to a lesser extent, from the World Bank.
Foreign loan disbursements also increased in the last financial year. Foreign loan and grant disbursements during FY24 stood at $9.891 billion, representing a 7% year-on-year increase.
Previously, the maximum budget assistance of $2.597 billion was released in FY22.
In FY23, $1.76 billion was released in budget support.
According to ERD data, in the last fiscal year, the World Bank and the Asian Development Bank each disbursed more than $2 billion.
The World Bank disbursed $2.154 billion, and the ADB disbursed $2.135 billion.
In FY24, commitments from development partners increased by 22% compared to the previous fiscal year, rising to $10.723 billion from $8.79 billion.
According to ERD data, the majority of commitments came from three development partners: ADB, the World Bank, and Japan.
