Bangladesh received no new loan commitments from four of its major development partners-India, China, Japan and Russia-during the first four months (July-October) of the current fiscal year, according to an updated report released on Sunday by the Economic Relations Division (ERD).
This means that no new projects financed by these countries were finalized during the period. However, officials confirmed that although no fresh assurances were made, these countries continued disbursing funds for previously approved projects.
The Asian Infrastructure Investment Bank (AIIB) also refrained from providing any new loan commitments in these four months.
Only $1.21 Billion in Total Commitments - Down Nearly $1 Billion from Last Year: According to ERD data, Bangladesh received a total of $1.21 billion in fresh loan commitments from all development partners during July-October. The Asian Development Bank (ADB) accounted for the largest share, with $580 million in commitments.
The World Bank provided commitments of around $12.5 million. Other development partners collectively pledged around $610 million. In comparison, the country received $2.55 billion in loan commitments during the same period last fiscal year-almost $1 billion more. ERD officials told Daily Industry that the sharp decline in commitments reflects a combination of global cautiousness, Bangladesh's macroeconomic vulnerabilities, and political uncertainty, all of which have slowed development partners' willingness to approve new projects.
Russia Tops Loan Disbursements in July-October: Despite the absence of fresh pledges, loan disbursements from major partners continued as per existing agreements. In the first four months of FY2025-26, development partners released a total of $1.66 billion.
Breakdown of disbursements: Russia disbursed $407.7 million, the highest among all partners, mainly for the Roopur Nuclear Power Plant. The World Bank disbursed $405.2 million. ADB disbursed around $250 million. China and India released $190 million and $80 million, respectively. Japan disbursed $80 million.
A senior ERD official, speaking to Daily Industry, said: “Disbursements for ongoing projects are progressing normally, but the absence of new commitments from major partners reflects the challenges Bangladesh is currently facing in securing fresh external financing.”
Loan Repayments Rising Faster Than New Inflows: ERD's report also highlights the increasing burden of loan repayments. In July-October: Total disbursements: $1.66 billion, Total repayments: $1.58 billion, Principal payments: $1.02 billion, Interest payments: $560 million. “The repayment burden is becoming heavier every year,” said a senior economist quoted in the Daily Industry report. “If new loans shrink while repayments rise, Bangladesh's capacity to finance development projects will weaken further.”
Analysts: Political Instability and Fiscal Stress behind Cautious Lending: Development finance analysts told Daily Industry that the lack of new commitments from India, China, Japan and Russia stems from a “wait-and-see” approach linked to: Bangladesh's prolonged economic slowdown, Uncertainty around large infrastructure project implementation, Higher debt servicing pressure, Escalating political tensions ahead of the election cycle, Reduced confidence in procurement and financial governance.
One economist noted: “Major development partners are hesitant to approve new loans until they see policy stability and clear reforms in Bangladesh's project management and debt strategy.”
Another analyst added: “The government will have to work harder to secure external financing at a time when reserves are falling and domestic borrowing space is shrinking.”
What This Means for Bangladesh: The absence of new loan commitments from key bilateral partners is likely to affect: Pipeline projects that remain unfunded, Infrastructure development, especially under India and Japan, Energy and transport projects under Chinese financing, Fiscal space, as repayments nearly equal fresh inflows.
Experts warn that unless Bangladesh can restore macroeconomic stability and improve development partner confidence, the slowdown in external financing may further strain the government's ability to fund large-scale development programs.
