Foreign debt repayment surges 16% in July

Bangladesh's external debt servicing surged 16 percent year-on-year in the first month of the current fiscal year (FY) 2025-26, while inflows from bilateral and multilateral lenders fell sharply.

The country repaid $446.68 million in July, up from $385.67 million in the same month a year earlier, according to provisional data from the Economic Relations Division (ERD) released yesterday.

The rise was driven by higher principal repayments, which jumped 24 percent to $327.72 million from $264.88 million in July 2024. Interest payments, however, eased slightly to $118.96 million from $120.79 million.

On the disbursement side, Bangladesh received $202.75 million in project assistance in July 2025, 43 percent lower than $358.32 million in the same month last year.

Of the total disbursement, $77.5 million came from the Asian Development Bank (ADB), followed by $59.07 million from the World Bank's concessional lending arm, the International Development Association (IDA), $17.24 million from Japan, and $13.62 million from India.

New foreign assistance commitments remained modest, with the ERD reporting $83.46 million in fresh pledges, mostly loans-- significantly up from $16.40 million in July 2024, but still lower than previous years.

Major lenders such as ADB, Asian Infrastructure Investment Bank, Japan, China, India, and Russia made no fresh commitments this July, except the IDA which pledged $6 million.

The remaining $77.46 million was pledged by "other" development partners.

The higher external debt payment depicts the twin pressures of declining foreign aid inflows and a growing repayment burden, underscoring the fiscal challenges facing the country amid a slowing economy and high external liabilities.

The trend continued in the pace of the last fiscal year, with Bangladesh's foreign debt servicing bill surpassing $4 billion for the first time in FY2024-25, marking a 21 percent increase from $3.37 billion the previous year.