Net foreign aid inflow down 52.5pc as repayments jump

Bangladesh's net foreign-aid inflow in the first 10 months of FY25 shrank by 52.45 per cent as repayments against outstanding loans surged significantly by 24.56 per cent, officials said on Thursday.

From July 2024 to April 2025, the country received only $1.656 billion in net aid against record-high repayments of $3.507 billion in principal and interests, the Economic Relations Division (ERD) statistics showed.

In the corresponding period of FY24, it got $3.472 billion in net aid after repaying $2.811 billion in principal and interests, according to the ERD data.

During the first 10 months of this fiscal year, the government received $5.163 billion in medium- to long-term loans (MLTLs) and grants from different foreign development partners, the data showed.

The amount of repayments against MLTLs in this period was an all-time high in Bangladesh, officials said.

Analysts say a significant rise in both principal and interest repayments against the outstanding MLTLs have affected the net aid flow to Bangladesh.

A senior ERD official said repayments of some big loans had started in recent months, which reduced the net aid inflow.

"The last government undertook some mega projects by borrowing higher amounts of external loans. The grace period - five to 10 years - of some of those loans has already finished. So, both principal and interest repayments have begun," he said.

According to the official statistics, the government repaid debts of $3.507 billion, including $1.296 billion in interest and $2.21 billion in principal, during the July-April period of FY25 against the country's total outstanding external MLTLs.

Of the $2.811 billion repayments in the corresponding period of the previous fiscal year, principal accounted for $1.663 billion and interest $1.148 billion.

The lenders, including the World Bank (WB), the Asian Development Bank (ADB), Japan, and the Asian Infrastructure Investment Bank (AIIB), released $5.163 billion in loans and grants during the first 10 months of the current fiscal year, 17.83 per cent lower than that in the same period of FY24.

From July to April of FY24, the lenders disbursed $6.284 billion in loans and grants.

During July-April of FY25, foreign aid commitments dropped by $3.344 billion (43.94 per cent) to $4.26 billion from $7.60 billion in the same period of the last fiscal year, the ERD data showed.

China, India, and Russia made no aid commitments between July and April of the current fiscal year.

However, the multilateral development partners and the biggest bilateral donor - the WB, the ADB, and Japan - maintained normal economic relations with the Professor Muhammad Yunus-led interim government.

During July-April of FY25, the ADB disbursed $1.403 billion in loans and grants, the WB $1.158 billion, and Japan $904.52 million.

Although India, China, and Russia made no aid commitments in this period, they started disbursing the funds committed earlier.

China released $320.74 million, Russia $674.93 million, India $152.17 million, and the AIIB only $83.33 million in this period.

The ERD has set a foreign aid disbursement target of $10.82 billion in loans and assistance in FY25.

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