New Delhi, Oct 28 (IANS) Bangladesh repaid over twice the amount it received in foreign loans during Q1 FY27, a new report has said, arguing that rising debt-servicing obligations exerts pressure on the country’s external finances.
The report from Bangladesh-based The Business Standard cited provisional data from the Economic Relations Division (ERD) saying the country paid $1.35 billion in principal and interest on foreign loans during July-September, more than double the foreign loan disbursements of $662.31 million.
Bangladesh paid back about $2.04 in debt servicing during the quarter for every dollar received from external lenders.
“Debt servicing rose 5.6 per cent year-on-year from $1.28 billion in the same period of FY26. Principal repayments increased to $858.92 million from $816.99 million, while interest payments climbed to $492.31 million from $462.96 million,” the report said.
Meanwhile, foreign loan disbursements dropped 42.3 per cent year-on-year to $662.31 million from nearly $1.15 billion, reducing the government’s access to external financing for development needs.
Economist Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development (InM), said these factors are creating enormous financial pressure on the government, complicating revenue collection and budget implementation.
The government may be forced to rely more on domestic borrowing, he warned as increased borrowing from the central bank could fuel inflation, and greater borrowing from commercial banks could limit credit for private businesses, hurting investment and employment.
Of the total funds received during the quarter, $541.74 million came as loans and $110.57 million as grants.
Mujeri said that the rising repayment burden reflected the volume of loans taken in prior years and related contractual obligations.
“Loans taken under agreements with various development partners in the past must now be repaid, including principal and interest, in accordance with the terms of those agreements. There is no scope to reduce or increase the repayment obligations,” the publication cited him.
—IANS
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