The ERD data, released today (28 January), shows that total foreign aid commitments dropped to $1.99 billion from $2.30 billion a year earlier, with grant inflows shrinking from $290 million to just $95 million.
Representational image. Photo: Collected
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Representational image. Photo: Collected
Bangladesh’s fresh foreign assistance fell sharply during July-December of the current fiscal year (FY2025–26), while debt repayment obligations continue to rise, raising concerns over fiscal space and project financing, according to the latest foreign assistance monthly report from the Economic Relations Division (ERD).
The ERD data, released today (28 January), shows that total foreign aid commitments dropped to $1.99 billion from $2.30 billion a year earlier, with grant inflows shrinking from $290 million to just $95 million.
Loan commitments also declined slightly, reflecting the country’s continued reliance on external borrowing, even as concessional aid dwindles.
Actual disbursements – the funds that reached government coffers – fell even more sharply, from $3.53 billion to $2.50 billion. While food aid remained stable at $25 million, project assistance disbursements saw a significant dip, pointing to delays in donor project execution or slower implementation of pipeline projects.
Meanwhile, debt servicing obligations rose to $2.20 billion, up from $1.98 billion in the first half of FY25. Both principal and interest payments climbed, placing renewed pressure on foreign exchange reserves and narrowing net aid inflows to just $300 million for the year.
Economists warn that the trend underscores a shift from concessional, grant-heavy financing to harder-term borrowing, increasing the country’s vulnerability to exchange rate fluctuations and global financial shocks.
“The report shows a narrowing window for fiscal manoeuvre. Bangladesh must now focus on better project execution, securing climate and blended finance, and strengthening debt sustainability,” said a senior ERD official.
