Foreign loan disbursement to Bangladesh declined sharply by almost 19% in the first nine months of the 2025–26 fiscal year, reflecting a slowdown in external financing amid ongoing political and economic instability.
According to the Economic Relations Division (ERD), development partners and international lending agencies disbursed $3.89 billion in loans and grants between July and March. This is significantly lower than the $4.81 billion recorded during the same period in the previous fiscal year.
The data indicates a broader weakening in external financial inflows, with repayments on existing foreign loans also remaining substantial during the period. Bangladesh repaid $3.53 billion in principal and interest, slightly higher than the $3.21 billion repaid a year earlier.
Officials and economists attribute the decline in disbursements to delays in development activities and reduced project momentum following prolonged political instability that began after major political changes in 2024. They note that disruptions in implementation have slowed the absorption of foreign aid and project financing.
The ERD report also shows a drop in new foreign aid commitments. Bangladesh secured $2.80 billion in commitments during the nine-month period, down from $3 billion in the same timeframe last year, marking a decline of more than 6%.
Analysts suggest that sustained uncertainty has impacted investor and donor confidence, contributing to slower project approvals and execution. The trend highlights the importance of stabilizing governance and accelerating development implementation to restore momentum in external financing.
Despite the downturn, multilateral and bilateral partners continue to play a key role in supporting Bangladesh’s development agenda, though at a reduced pace compared to previous years.
