July sees foreign aid drop, repayments outstrip new loans

In the first month of the fiscal year, foreign aid disbursements have faced a setback, with more money being paid out in debt repayments than received.

This shortfall occurred despite a need for a boost in foreign aid to counteract the domestic economic stagnation caused by violence and unrest surrounding the Anti-discrimination Student Movement that brought down the Sheikh Hasina regime.

In July, Bangladesh received a total of $358.3 million in foreign aid.

However, during the same period, $385.6 million was paid out in debt repayments, the Economic Relations Division, or ERD, reported on Wednesday.

Of the total foreign aid received, $287 million was in the form of loans, while $71.3 million came as grants. Conversely, repayments included $265 million in principal and over $120 million in interest.

In July of the previous year, the government had repaid $250 million in interest and principal on foreign loans.

This year, there was no new commitment of foreign loans, although $16 million in grant commitments were made.

Compared with the same period last year, foreign aid disbursements in July decreased by 17.15 percent.

Last year, development partners and lenders disbursed $405.7 million against the promised amount, while in July 2022-23, the disbursement was $480 million.

In the last fiscal year, Bangladesh received $9.86 billion in loans and repaid nearly $3.36 billion in interest and principal.