Bangladesh is facing a notable slowdown in foreign loan inflows, with disbursements dropping sharply in the first nine months of the current fiscal year, according to newly released government data. The decline comes as the country continues to grapple with economic uncertainty following the political transition of 2024.
Figures published by the Economic Relations Division (ERD) show that development partners and international lenders released $3.89 billion in loans and grants between July 2025 and March 2026. This represents a 19 percent decrease from the $4.80 billion disbursed during the same period in the previous fiscal year.
At the same time, Bangladesh’s external debt servicing obligations have continued to rise. The government paid $3.52 billion in interest and principal repayments over the nine-month period, up from $3.21 billion a year earlier. The narrowing gap between inflows and repayments is raising concerns among economists about pressure on foreign exchange reserves and development financing.
ERD officials, speaking during a briefing in Dhaka on Thursday, acknowledged the slowdown and pointed to broader economic and political factors affecting disbursement timelines. “Disbursement has slowed due to implementation challenges and ongoing economic adjustments,” an ERD official said at the press briefing held at the agency’s headquarters, noting that several large projects have faced delays.
Economists say the situation reflects deeper structural and political uncertainties that have persisted since the 2024 Bangladesh political uprising, which led to a change in government. Development activities have struggled to regain momentum over the past year and a half, affecting both project execution and donor confidence.
“When political stability is uncertain, development partners tend to proceed cautiously, which affects both commitments and disbursements,” said economist Dr. Zahid Hussain, a former lead economist at the World Bank’s Dhaka office, during a recent policy discussion in Dhaka. He emphasized that delays in project implementation also contribute significantly to lower fund utilization.
The ERD data further shows that fresh commitments of foreign assistance have also declined. New pledges fell to $2.8 billion during the July–March period, compared with $3 billion in the previous year, marking a drop of more than 6 percent. This trend suggests that not only are existing funds being released more slowly, but new financing agreements are also becoming less frequent.
Analysts warn that the dual challenge of reduced inflows and rising repayments could constrain Bangladesh’s development ambitions, particularly in infrastructure, energy, and social sectors. Many large-scale projects depend heavily on foreign financing, and delays in disbursement can stall construction timelines, increase costs, and affect employment generation.
The broader economic context has also added to the pressure. Bangladesh has been dealing with elevated inflation, currency volatility, and declining foreign exchange reserves since 2024. These factors have made macroeconomic management more complex and have heightened reliance on external financing to sustain growth.
Policy experts argue that restoring momentum will require improvements in governance, project implementation capacity, and investor confidence. They also stress the importance of political stability in ensuring continued support from international lenders and development partners.
Despite the current slowdown, officials maintain that Bangladesh’s long-term development prospects remain intact, citing the country’s track record of growth and infrastructure expansion over the past decade. However, they acknowledge that the immediate outlook will depend on how quickly economic stability can be restored and development projects can resume at full pace.
