The disbursement of foreign loans in the first four month of the current financial year dropped by 26 per cent due mainly to the regime change in the country, economists said.
The country鈥檚 multilateral and bilateral lenders disbursed $1,202.00 million in the July-October of FY25 compared with $1626.17 million during the same period of FY24, according to the Economic Relations Division update released on November 28.
Slowdown in the foreign loan disbursement was high in the July-September period of FY25 as the ERD calculated the rate at 35 per cent to $831.12 million from $1,276.22 million in FY24.
Economists said the trend was not unusual against the backdrop of the regime change on August 5 amid a mass uprising and the assumption in power by the interim government.
The new government is reviewing many annual development programme projects, including lenders-driven ones, to find out the politically motivated and less important projects.
It is also renegotiating with lenders regarding many projects taken by the immediate past political regime, said former World Bank Dhaka office chief economist Zahid Hussain.
The slowdown in disbursement of foreign loan is not unusual, he said.
Because of the slowdown in disbursement of the foreign loans the ongoing pressure on the government in repayment of debt is increasing.
The government paid back $1,437.90 million in the July-October period of FY25 compared with that of $1,101.50 million during the same period of FY24.
The rate of increase was 29 per cent in the July-September of FY25.
Institute for Inclusive Finance and Development executive director MK Mujeri said that the interim government needed dynamism in negotiating with the lenders to reverse the trend.
He said that a positive development was imperative to tackle the economic downturn persisting since 2022 amid a shortage of dollars because of mismanagement and flawed policies by the immediate past political regime.
Over the past three years until FY24, the Bangladesh Bank sold more than $34 billion to commercial banks depleting the country鈥檚 foreign exchange reserve which is now hovering at $19 billion.
In the past month, Moody鈥檚 in a report downgraded Bangladesh鈥檚 credit rating citing heightened political risks and lower growth.
The global leading agency lowered the rating to B2 from B1 as it found that the country鈥檚 outlook had been changed to 鈥榥egative鈥� from 鈥榮table鈥�.
