Bangladesh faced a significant slowdown in fresh foreign financing during the first quarter of fiscal year 2026-27, as most of its major development partners refrained from making new loan commitments, raising concerns about future development spending amid growing external debt repayment pressure.
The latest provisional figures from the Economic Relations Division (ERD) show that several key development partners, including the World Bank, Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), China, Russia and India, made no new financing commitments between July and September.
Japan was the only major lender to announce a fresh commitment during the quarter, amounting to US$3.51 million, a relatively small contribution compared with Bangladesh’s development financing requirements.
Although new commitments from traditional major lenders remained virtually absent, the country continued to receive funds under previously signed loan agreements. Bangladesh received US$662.31 million in foreign assistance during the quarter, while total commitments from all development partners reached US$1.273 billion.
A significant portion of the new commitments came from development partners outside the traditional group of major lenders. The Islamic Development Bank, United Nations, UK Aid, Germany, Denmark, the Netherlands, Norway, Sweden and the United States collectively committed US$1.269 billion during the three-month period.
In terms of actual fund releases, the World Bank was the largest contributor among the major development partners, disbursing US$196.51 million. The Manila-based ADB followed with US$162.11 million.
India released US$104.99 million, while Japan disbursed US$44.66 million. China and Russia provided US$14.66 million and US$20.65 million, respectively. The AIIB did not release any funds or make new commitments during the period.
The situation has drawn attention to the widening gap between Bangladesh’s fresh financing needs and the funds being released under existing development assistance arrangements.
According to the government’s latest external financing assessment, the country’s foreign loan repayments during the first quarter were nearly double the amount received from development partners. This reflects the growing pressure of servicing external debt accumulated through years of borrowing from bilateral and multilateral sources.
As principal and interest payments continue to rise, a larger share of foreign currency earnings is being directed towards debt servicing. This could further complicate the management of the country’s external sector and limit the availability of resources for development activities.
Securing new concessional loans has therefore become increasingly important for Bangladesh to sustain ongoing development programmes while managing its rising repayment obligations.
The latest ERD statistics also suggest that Bangladesh is becoming increasingly reliant on financing from development partners beyond its traditional major lenders.
Explaining the slow pace of foreign aid disbursement, a senior ERD official said the release of funds largely depended on the progress of development projects financed by external partners.
He said delays in project execution by government agencies often affected the disbursement of foreign assistance, particularly during the early months of a fiscal year.
“Usually, the first quarters of every fiscal year remain slow in terms of project execution by government agencies. We hope project implementation will gain momentum from the second quarter and foreign aid disbursements will also pick up,” the official said.
