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Bangladesh received foreign aid worth $846.12 million in the first quarter (Q1) of the current fiscal year (FY 2024-25).
The amount is around 34% lower than $1.28 billion received in the July-September quarter of the last FY, according to the latest figures of the Economic Relations Division (ERD).
During the period under review, the country paid $1.13 billion in foreign debt servicing which is 33% higher than the amount received in loans and grants.
The government repaid $870.46 million in the Q1, FY24. Debt servicing cost increased by 29.42% in the reporting period, according to the ERD figures.
New foreign aid commitments observed a drastic fall, over 99%. The ERD received commitments worth $27.41 million in the first quarter of the fiscal year, which was $2.88 billion in the same period of last fiscal.
The commitment dropped by $2.85 billion in the Q1, FY25 compared with the same period of the previous fiscal.
Sluggish implementation of the development activities pushed down the disbursements of foreign loans, said economists and officials at the ERD.
They said the government has decided to review further the upcoming projects, affecting the commitments.
Dr Mustafa K Mujery, former director general of the BIDS, said that servicing the previous loans is the top priority of the government rather than implementing the projects or approving new ones.
He said the previous government received a huge amount of loans, surpassing the country's repayment capacity, to ensure visible development.
Failure in generating revenue as per the expectation from those projects put the interim government under pressure, he added.
The ERD report revealed that the government received $27.41 million of commitment for grants in the last three months and failed to sign any loan deal.
The ERD signed grant deals worth $90.55 million and loan deals worth $2.79 billion in the first quarter of the last FY.
Of the foreign aid disbursed in the Q1, $182.50 million were in grants and $663.62 million in loans as compared to $50.52 million in grants and $1.23 billion in loans of the same quarter last FY.