Foreign loan commitments slide 93% in Jul-Oct

Bangladesh's foreign loan commitments from development partners plummeted by a staggering 93% year-on-year in the first four months of the current fiscal year, according to data from the Economic Relations Division (ERD).

Between July and October, only $254.57 million in commitments was received, compared to $3.628 billion in the equivalent period of the previous fiscal year.

ERD officials say the new government is reviewing the proposed projects for foreign loans, which has led to a decrease in commitments as new loan agreements are not being signed.

On the other hand, loan servicing has increased as repayments for many foreign loans taken by the previous government have started.

Officials said once the review is completed, the loan application process will begin, and the government is optimistic that commitments will be fulfilled according to the targets.

Officials also said since the interim government took office in early August, multilateral and various bilateral development partners have provided preliminary assurances of loan support and budget assistance for various projects.

Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development, told The Business Standard, "The current situation is far from normal, which is why the necessary preparatory work for securing foreign loans is not progressing as expected."

He explained, "The government is reviewing project proposals for foreign loans, leading to a decline in foreign debt commitments. However, several development agencies have announced their willingness to provide project loans and budget support. Given this, the preparatory work for foreign loans needs to be expedited."

Repayments exceed loan disbursements

According to ERD data, in the first four months of the current fiscal year, Bangladesh's repayment of foreign loans surpassed the amount disbursed by development partners.

Bangladesh received $1.2 billion in foreign aid from July to October, while it repaid $1.437 billion in principal and interest during the same period.

According to ERD data, foreign aid disbursements have decreased by 26% to $1.6 billion compared to the same period last year.

ERD officials also noted a significant surge in foreign loan repayments, primarily due to increased principal repayments on China's loans for the Padma Rail Link project.

According to ERD data, foreign loan repayments rose by 30.5% to $1.437 billion in July-October compared to the same period last year.
Principal repayments saw a sharp increase of 41.2%, with $895.58 million repaid in July-October, compared to $634.1 million a year ago. Interest repayments also increased, amounting to $542.32 million, up from $467.42 million, the data shows.

Disbursements in July

According to ERD data, Japan disbursed the highest amount in the July-October period, releasing $266.30 million. This was followed by the ADB, which provided $266.11 million, Russia with $149.53 million, the World Bank with $178.16 million, and India with $63.83 million. China did not release any funds during the period.