New concessions and commitments on foreign loans are falling. But the pressure of old loan installments and interest payments is increasing rapidly. As debt repayments for major infrastructure projects have now begun, the pressure on the foreign exchange has increased. At the same time, development partners are now more cautious due to political and economic uncertainty, slow project implementation and slow progress in reform programmes. As a result, the speed of new loans slows down, but old loans continue to increase.
The latest report of the Economic Relations Department (ERD) has revealed such a picture. According to the report published on Sunday, in the first 10 months of the current financial year 2025-26, 380 million 23 million dollars had to be paid for foreign loan installments and interest. In local currency, the amount is about 46 thousand 465 crores. In the same period of the previous financial year, this amount was 350 crore 71 lakh 70 thousand dollars or about 42 thousand 282 crore taka. That is, the debt repayment pressure has increased by about 4 thousand 200 crores in a span of one year.
According to the data of ERD, during the period from July to April of the current financial year, the principal loan has been repaid 246 crore 78 lakh 10 thousand dollars. And 133 crore 44 lakh 90 thousand dollars has been paid for interest. The principal repayment amount in local currency is Tk 30 thousand 156 crore 80 lakhs. On the other hand, 16 thousand 308 crore 27 lakh taka has been spent on interest payment alone. That is, now the interest pressure is getting bigger along with the original amount of the loan.
Economists say the grace period for big project loans taken a few years ago is coming to an end. As a result, regular installments and interest have to be paid. Added to this is the long process and cost increase in the implementation of the project. The debt burden has further increased as many projects have not been completed on schedule.
If you want to know, Center for Policy Dialogue (CPD) special fellow Dr. Mostafizur Rahman said that both time and cost have increased in many projects. It also increases debt pressure. He said, now the terms of foreign loans have become more expensive than before. Development partners are prioritizing reform, accountability and transparency before disbursing funds. So the biggest challenge now is to use the loan money effectively.
On the other hand, the trend of new loan concessions has also decreased alarmingly. In the first 10 months of the current financial year, the foreign debt relief was 423 crore 62 million dollars. But at this time the discount was supposed to be 786 million 80 million dollars. That is, the discount has decreased by 46.16 percent compared to the target. 516 crore 34 lakh 40 thousand dollars were discounted during the same period of the previous financial year. According to that, in one year, loan concessions have decreased by 93 million dollars.
New loan commitments also fell significantly. In the first 10 months of the current financial year, new commitments have come to 280 crore 77 lakh 50 thousand dollars. In the same period of the previous year which was 425 crore 94 lakh 70 thousand dollars. In other words, the new commitments decreased by about 145 million dollars in one year.
According to ERD data, the largest share of debt relief in the current fiscal year came from European sources. Its amount is 107 crore 78 lakh 60 thousand dollars. In addition, the World Bank gave 838.1 million 40 thousand dollars and the Asian Development Bank (ADB) gave 71.6 million dollars. On the other hand, most of the new commitments came from ADB, amounting to 126 billion 97 million 10 thousand dollars. Apart from this, 41.62 million 50 thousand dollars came from World Bank’s IDA and 23.56 million 90 thousand dollars came from China.
However, many of the major development partners did not make new commitments. ERD officials say that in the first 10 months of the current fiscal year, no new loan commitments came from AIIB, Japan, India and Russia.
The former chief economist of the World Bank’s Dhaka office. Zahid Hossain said, due to the dollar crisis, import control and slow implementation of projects, the loan concession has reduced in many projects. At the same time, development partners are now placing more emphasis on reforms and good governance before debt relief.
