Bangladesh pays off Tk 39,000 crore foreign loan in 9 months

In the first nine months of the current fiscal year (FY25), Bangladesh repaid $3.212 billion in principal and interest to development partners, marking a 24.9% increase from the $2.571 billion paid during the same period last fiscal year, according to the latest Economic Relations Division (ERD) report.

That is, the amount of foreign debt repaid, including interest and principal, is equal to $3.21 billion or Tk 39,000 crore.

The report published on end of the April details a 32.6% rise in principal repayments, with $2.011 billion paid in July-March of FY25, up from $1.516 billion in the same period of FY24. Interest payments also rose by 13.8% to $1.2 billion, compared to $1.05 billion in the same period last fiscal year.

According to ERD officials, the debt repayment pressure is growing as the grace periods for large loans and budget support, mostly taken for various mega projects under the previous government, are ending. Additionally, high market-based interest rates have contributed to the rising burden. Total repayments of FY24 amounted to $3.37 billion.

Mustafa K Mujeri, executive director at the Institute for Inclusive Finance and Development, said Bangladesh has taken on several large loans in recent years, many of which came with tough conditions –-short repayment periods and high interest rates. The grace periods on a number of these loans have already ended, which has led to a rise in repayment obligations, he said.

Mujeri added that within the next one to two years, the grace period for several loans taken for Russia-backed nuclear power projects will also expire, which is expected to cause a significant jump in debt repayments.

According to ERD data, although foreign debt repayments jumped, commitments from development partners have decreased, as well as the disbursement of funds.

Between July and March, commitments from development partners fell by 58.5%, with the government receiving $3 billion in commitments during this period, compared to $7.24 billion at the same time last year.

Similarly, disbursements from development partners dropped by 14.6%, with $4.808 billion in foreign loans and grants disbursed, down from $5.631 billion during the same period last fiscal year.

During the July-March period, the ADB disbursed the most, $1.226 billion. The World Bank followed with $1.067 billion. Japan disbursed $892.26 million, Russia $670.28 million, China $320.74 million, and India $136.55 million.