Bangladesh has seen a sharp decline in foreign loan disbursement due to the sluggish implementation of development projects, leading to a situation where debt repayments exceed new borrowings.

Between July and February of the 2024-25 fiscal year, foreign funding for development projects fell by 17.27% to $4.13 billion, while repayments on outstanding debt surged by nearly 30% to $2.63 billion, according to the Economic Relations Department (ERD). Of the total repayments, $1.69 billion went toward principal payments, and $944 million was paid in interest.

To address the budget deficit, the government has reduced the number of approved projects, tightened spending, and scrutinised allocations, contributing to the decline in foreign financing.

Despite interest from development partners, new loan agreements have been limited, amounting to only $2.35 billion during this period, a 67.32% drop from the previous fiscal year’s $7.2 billion. Meanwhile, $9.16 billion remains in the loan pipeline.

In contrast, international donors have increased food aid, allocating $25 million over the past eight months—an increase of 138% compared to $10 million in the same period last year.