Foreign debt repayment higher than dev partners’ disbursements in July

In the first month of the current fiscal year, Bangladesh’s repayment of foreign loans surpassed the amount disbursed by development partners. 

According to the Economic Relations Division (ERD) data, Bangladesh received $358.33 million in foreign aid in July, while it repaid $385.67 million in principal and interest during the same period.

ERD officials said typically, implementation of projects slows down at the beginning of a fiscal year which results in lower disbursements.

Moreover, the political unrest stemming from student protests against discrimination throughout July impacted the execution of some projects which contributed to the decrease in disbursements compared to the same period last year, the officials added.

An ERD official, wishing anonymity, told The Business Standard today that as per the data the disbursement of foreign loans has decreased by 11.52% in July of the current fiscal year compared to the same period last year, when $405 million was released by development partners.

ERD officials also said that foreign loan repayments surged largely due to increased principal repayments on China’s loans for the Padma Rail Link project.

According to ERD data, foreign loan repayments increased by 52.34% this July compared to the same month last year. In last fiscal’s July, Bangladesh repaid $253.09 million, whereas this year, it has repaid $385.67 million.

The principal repayment rose by 80.76%, with $264.88 million paid this July compared to $146.53 million in the same period last year. The interest repayment amounted to $120.79 million in July this year, up from $106.56 million in the same period last year, the data states.

Meanwhile, no loan agreements were signed with development partners in the first month of the current fiscal. However, during this period, Bangladesh received grant commitments amounting to $16.40 million, compared to $6.92 million in July of the previous fiscal year.

Disbursements by development partners in July

According to ERD data, Japan disbursed the highest amount in July, releasing $105 million. The Asian Development Bank (ADB) followed with $81.56 million, the European Union with $64.57 million, the World Bank with $38.39 million, Russia with $29 million, and India with $21.59 million.