Bangladesh鈥檚 foreign debt servicing increased by 16 per cent in July, first month of the fiscal year 2025-26, with repayments far outpacing fresh loan inflows, raising concerns about mounting vulnerabilities in the country鈥檚 external financing.
According to provisional data released by the Economic Relations Division (ERD) on Thursday, the government repaid $446.68 million in July of FY2025鈥�26, up from $385.67 million in the same month last year.
Of this, principal repayments jumped by 24 per cent to $327.72 million from $264.88 million a year earlier, while interest payments slightly eased to $118.96 million compared to $120.79 million in July 2024.
In local currency, foreign debt servicing recorded Tk 5,448 crore in July, which was Tk 4,548 crore in the same month last year.
On the other hand, loan disbursements fell sharply.
Bangladesh received only $202.75 million in project assistance in July 2025, down 43 per cent from $358.32 million in the same month of the previous fiscal year.
Fresh commitments were also limited, amounting to just $83.46 million, mostly in the form of loans, compared with $16.40 million in July 2024.
It means that the country paid out more than double what it received in new funds in July, underscoring the growing repayment pressure.
ERD officials said Pressure on debt repayment would increase for maturity of many loans taken for implementing projects on short grace period.
The pressure is only expected to intensify.
Bangladesh鈥檚 external debt repayment obligations are projected to around $5 billion in FY2025鈥�26, compared to $4.086 billion repaid in FY2024鈥�25.
Economists warned that repayment stress will worsen in the coming years as grace periods for more loans are set to expire.
They said that the Awami League-led government had taken many large unnecessary and overvalued projects which delivered poor returns, and now became burden for the economy.
To maintain debt sustainability the flow of loans on favourable interest rates has to increase in addition to the generation of adequate revenue.
The government鈥檚 outstanding foreign debt soared to $84.88 billion in March 2025 from mere $25 billion in 2009.
The high overseas borrowing has been attributed to implementation of big-budget development projects, namely the Rooppur Nuclear Power Plant, Padma Bridge Rail Link Project, Karnaphuli River Underneath Tunnel, Metro Rail Line Project, LNG Terminal in Maheshkhali, and Payra Sea Port.
The government should go for restructuring of loans as economic benefits of many projects were yet to begin.聽聽聽
Besides, inflation, exchange rate volatility, and high growth of non-performing loans should be checked for absorbing the pressure of high growth in debt repayment, they said.