Bangladesh witnessed a sharp decline in foreign assistance commitments in the 2025-26 fiscal year, while debt servicing on external loans increased significantly, according to provisional data released by the Economic Relations Division (ERD).

The latest Foreign Assistance Monthly Report showed that total foreign aid commitments stood at USD 5.24 billion during FY2025-26, down from USD 8.32 billion in the previous fiscal year, marking a decline of nearly 37 per cent. 

The drop was driven entirely by lower project assistance commitments, which fell to USD 5.01 billion in loans and USD 233.78 million in grants, compared with USD 7.94 billion in loans and USD 381.65 million in grants in FY2024-25. No food assistance commitments were recorded in either fiscal year.

Despite the decline in new commitments, foreign aid disbursement remained relatively strong.

According to the report, total disbursement amounted to USD 8.07 billion in FY2025-26, compared with USD 8.57 billion in the previous fiscal year. Project assistance disbursement reached USD 8.02 billion, including USD 7.52 billion in loans and USD 503.95 million in grants. Food assistance remained unchanged at USD 50 million.

The report also highlighted a continued rise in Bangladesh’s external debt servicing obligations.

During FY2025-26, the country paid USD 4.49 billion in principal and interest on foreign loans, up from USD 4.09 billion in FY2024-25.

Of the total debt servicing, USD 2.95 billion was principal repayment and USD 1.54 billion was interest payment in the last 2025-26 fiscal. It was USD 2.59 billion of principal repayment and USD 1.49 billion interest payment in the last 2024-25 fiscal.

In local currency, total external debt servicing amounted to Tk 54,957.23 crore, compared with Tk 49,390.68 crore in the previous fiscal year. 

The provisional report, prepared by the Foreign Aid Budget and Accounts (FABA) Wing of the ERD, covers the period from July 2025 to June 2026.