There has been a major slowdown in the country's development activities based on foreign debt.
In the first 10 months (July-April) of the current FY26 fiscal year, there has been a significant deficit compared to the target in both debt relief from development partners and new loan commitments.
However, in contrast, the pressure to repay installments and interest on previously taken loans has increased further.
This information has emerged in the latest report published by the Economic Relations Department (ERD) on Sunday (May 24).
According to ERD data, the target for foreign debt relief in the current FY26 was set at $7.868 billion. But by the end of the 10 months of the fiscal, only $4.236 billion has been released from development partners, which is 53.84% of the total target.
In the same period of the last fiscal year, foreign debt relief was $5.128 billion. Accordingly, disbursements have decreased by about 18% in the current fiscal year.
According to analysts, slow project implementation, complex procurement processes, delays in development projects, and global economic uncertainty have led to such stagnation in disbursements of foreign loans.
This may also put pressure on the government's development spending.
On the other hand, there has also been a significant slowdown in the collection of new foreign loan commitments.
Although a target of $6.715 billion was set for the current fiscal year, only $2.807 billion has been received by April. That is, only 41.84% of the target has been achieved.
In the same period of the last fiscal year, new loan commitments were $4.259 billion. Accordingly, commitments have decreased by about 34% in a year.
According to economists, the decrease in new loan commitments from development partners may have a negative impact on the implementation of future development projects.
There is a risk of increasing pressure on financing large projects in the infrastructure, energy, and transport sectors in particular.
Meanwhile, despite the decrease in debt relief and new commitments, the pressure to repay foreign debt is continuously increasing.
According to ERD data, Bangladesh paid $3.507 billion in installments and interest on loans to development partners during July-April of the last fiscal year. It has increased to $3.802 billion during the same period of the current fiscal year.
That is, the amount of foreign debt repayment has increased by about 8.41% in a year.
According to experts, with the increase in foreign borrowing for large infrastructure projects in recent years, the pressure to repay is also increasing rapidly. As a result, if the flow of new debt decreases, additional pressure may be created on foreign exchange reserves and the macroeconomic environment.
