External debt servicing hits record $1.44b in Q1

Bangladesh's debt servicing for external loans has hit a record high of $1.44 billion in the first four months, nearly 5.5 times higher than the foreign aid commitment by development partners, official data showed on Thursday.

The foreign debt servicing against the outstanding medium to long-term loans is even higher than partners' commitment during the July-October period of this fiscal, according to the Economic Relations Division (ERD).

ERD data disclosed that development partners made a commitment of only $254.57 million worth of foreign assistance but disbursed $1.20 billion in loans and grants during the first four months of fiscal year (FY) 2024-25.

Out of the $1.44-billion debt servicing, the Bangladesh government repaid $542 million as interest on the outstanding loans and $895.58 million as the principal amount during the period in question.

Leading development partners, including the Asian Development Bank (ADB), Japan, Asian Infrastructure Investment Bank (AIIB), China, Russia and India had not confirmed any single penny during the period.

An ERD official said the student-mass uprising during the July-October period had hit foreign aid inflows hard.

Besides, some big development partners like China, AIIB and India had not disbursed foreign loan during the same period.

The ERD data showed all the development partners made a commitment of $1.20 billion worth of assistance in Q1 of the current fiscal year.

During the same period in FY24, they made a commitment worth $1.66 billion through signing loan agreements, according to the data.

In FY24, almost all the leading partners made aid commitments to Bangladesh, ERD officials said.

"Aid commitment will pick up in the coming months. As there was political unrest during the July-October period, the leading development partners had not made any commitment," said another ERD official.

Now, missions from all the development partners are coming for discussing with different government entities on prospective loans, added the official.

Bangladesh is going to sign some big loans, including budget aid, with ADB, WB and Japan within this fiscal.

"In the second half (January-June) of FY25," the official said, "we are expecting a big jump of aid commitment."

Meanwhile, a total of $1.10 billion was paid against outstanding mid- to long-term loans during the July-October period in FY24.