Repayment outpaces foreign aid inflow

Bangladesh spent US$2.636 billion in debt servicing against principal and interest during July-February of this fiscal year at a rising rate that outpaces receipt, according to officials, affecting execution of aided projects.

The foreign-aid inflow dropped as both commitment and disbursement ebbed down in the first eight months the fiscal year (FY) 2024-25, officials said.

According to Economic Relations Division (ERD) data, foreign-aid commitments squeezed 67.3 per cent in the July-February period while disbursements dropped 17.3 per cent.

Bangladesh repaid $2.636 billion worth of funds to development partners in July-February period of this fiscal against its debts compared to $2.03 billion in the same period of last FY2024, according to the ERD data, released Monday.

Principal amount payment increased to $1.69 billion in the first eight months of the current FY2025 compared to $1.22 billion in the corresponding period the last fiscal.

Interest payment rose from $805.95 million during Jul-Feb period last fiscal to $944.08 million in the current FY2025, the official data showed.

Meanwhile, the foreign development partners and lenders released $4.11 billion in loans and grants during July-February this fiscal compared to $4.99 billion in the same period last fiscal.

The ERD statistics showed that the foreign-aid commitment was much lower, amounting to $2.35 billion, during this period. In the same period last fiscal, the DPs confirmed $7.20 billion worth of loans and grants.

The bilateral trios of China, India and Russia did not make any aid commitment during the first eight months of FY2024-25, they said.

"The lower foreign aid inflow has already affected implementation of dozens of ongoing development projects," some officials and project implementers said in an identical view.

"However, the multilateral development partners and the biggest bilateral donor -the World Bank, the Asian Development Bank and Japan-have kept their normal economic relations with Bangladesh's newly formed Professor Yunus government," says one insider.

During Jul-Feb FY2025, the ADB disbursed $1.13 billion worth of loans and grants, the WB $959.14 million, and Japan $728.39 million.

Meanwhile, although India, China and Russia had not made any aid commitment during the period, they started disbursing their committed funds.

China released $267.81 million, Russia $ 536.87 million, India $96.80 million and the AIIB $47.58 million during the first eight months, the ERD data showed.

Meanwhile, the ERD has set a target of receiving $10.82 billion worth of loans and assistance disbursed during this fiscal year till the end of next June.

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