Foreign loan commitment jumps 300% in Jul-Feb

Although foreign aid commitments made to Bangladesh by global lenders surged more than 300 percent year-on-year in the first eight months of the current fiscal year of 2023-24, disbursement has remained almost flat.

In the July-February period, loan commitments from development partners increased to $7.2 billion, up 304 percent, according to the Economic Relations Division (ERD) of the finance ministry.

Around $6.74 billion came in the form of loans while the remaining $461.14 million were grants.

But at a time when Bangladesh is badly in need of foreign currencies, the loan disbursement stood at $4.99 billion, only up by 2 percent from that in the same period a year ago.

Lower disbursement of foreign assistance is a perennial problem for Bangladesh, driven by the country's failure to implement projects on time and meet conditions attached to loans by lenders.

The lower release of funds has prompted the government to order ministries to accelerate the use of loans to give a much-needed fillip to the foreign exchange reserves, which have halved in a span of two years.

Besides, the country's foreign debt servicing rose by 43 percent in the first eight months of the current fiscal year, which was mostly driven by rising interest rates.

In the July-February period, the government paid $2.03 billion for interest and principal payments to international lenders, up from $1.42 billion in the same period of the previous year.

The finance ministry projects that foreign debt repayments, including interest, will reach $4.5 billion in 2025-26.

In the current fiscal year, repayments are likely to jump by 33.52 percent to $3.57 billion, crossing the target of $2.79 billion set in the national budget.

Asian Development Bank (ADB) released most of the money in the eight-month period, totalling $1.30 billion, followed by America and Japan of a total of $1.04 billion.

Furthermore, World Bank disbursed $877.87 million, Russia $807.50 million, and China $361.71 million.

In terms of commitment, the ADB also secured the top position with $2.62 billion, followed by America and Japan with $2.02 billion.