Bangladesh's foreign aid commitments fall 37%, debt servicing rises 11%

Foreign aid commitments fell sharply in fiscal year 2025-26 while debt servicing climbed to a record high, highlighting the country's tightening external financing conditions as it grapples with slowing concessional inflows and rising repayment obligations.

Total foreign assistance commitments dropped 37 percent to $5.24 billion in FY26 from $8.32 billion a year earlier, a decline of nearly 37 percent, according to provisional data from the Economic Relations Division (ERD).

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The fall was driven by a sharp reduction in project loan commitments, which declined to $5.01 billion from $7.94 billion a year earlier. Grant commitments also fell to $233.78 million from $381.65 million.

Foreign aid disbursements also declined, though at a slower pace.

Bangladesh received $8.07 billion in foreign assistance during FY26, down from $8.57 billion in the previous fiscal year. Project aid disbursements fell to $8.02 billion from $8.52 billion, while grant disbursements increased to $553.95 million from $454.56 million.

Meanwhile, the country's external debt-servicing burden continued to rise.

Bangladesh paid $4.49 billion in principal and interest on foreign loans during FY26, up from $4.09 billion a year earlier, an increase of nearly 11 percent.

Principal repayments rose to $2.95 billion from $2.60 billion, while interest payments increased to $1.54 billion from $1.49 billion. In local currency, total debt servicing climbed to Tk 54,957 crore, compared with Tk 49,391 crore in FY25.