Bangladesh’s new foreign loan commitments have surged by over 33 times in the initial quarter of the ongoing fiscal year, although the total amount borrowed still falls below the set borrowing limit by the International Monetary Fund (IMF).
From July to September of FY2025-26, the government secured commitments totaling $911 million, a significant increase from the $27 million obtained during the same period the previous year, as per data from the Economic Relations Division (ERD).
Out of the total amount, approximately $482 million was sourced from the Asian Development Bank (ADB), $12.4 million from the World Bank, with the remaining sum committed by various bilateral development partners.
The IMF recently imposed a borrowing ceiling on Bangladesh during the third and fourth reviews of its $5.5 billion loan package earlier this year. This new stipulation aims to mitigate risks associated with the country’s escalating external debt.
As per the terms, Bangladesh is allowed to borrow a maximum of $8.44 billion in fresh external loans throughout FY2026, with a quarterly cap of $1.91 billion for the initial quarter. The IMF has stated its intention to closely monitor the government’s foreign borrowing on a quarterly basis.
An IMF delegation is presently in Dhaka to carry out the fifth review of the programme, focusing on assessing both domestic and external debt levels.
Initially, when the IMF sanctioned a $4.7 billion program in early 2023, there was no such borrowing cap in place. In June 2025, the fourth and fifth tranches, totaling around $800 million, were approved, extending the program duration by six months. To date, Bangladesh has received $3.6 billion under the loan package.
A senior official from the finance ministry, who spoke on condition of anonymity, stated that the borrowing ceiling is based on the latest Debt Sustainability Analysis (DSA) by the IMF. Bangladesh has been classified as a moderate-risk country for two consecutive fiscal years — FY2023 and FY2024.
The downgrade from low risk was attributed to escalating repayment pressures due to weaker export earnings and sluggish revenue growth.
According to the DSA, Bangladesh’s debt-to-export ratio surged to 162.7 percent in FY2024, significantly higher than the IMF’s previous estimate of about 116-118 percent. Additionally, the debt service-to-revenue ratio has risen, reducing fiscal leeway for further borrowing.
The IMF highlighted that these ratios surpassed its stress-test thresholds, mainly due to the downward revision of export figures.
The finance ministry official mentioned, “Despite Bangladesh’s overall external debt being below all IMF thresholds, specific risks have increased, prompting the implementation of this precautionary measure.”
Government records reveal that external debt escalated from $20.3 billion in FY2010 to $68.8 billion in FY2024, reaching $80.19 billion by June 2025.
Consequently, debt servicing has increased from $876 million in FY2010 to roughly $4 billion in the past fiscal year. In the initial quarter of FY2026, debt servicing rose by 14 percent year-on-year to $1.28 billion, comprising $817 million in principal payments and the remainder as interest.
On the other hand, foreign aid disbursements surged by 36 percent year-on-year to $1.15 billion in the first quarter, largely influenced by a stable political climate.
The World Bank led the disbursement figures with $323 million allocated to projects, followed by Russia’s $315 million for the Rooppur Nuclear Power Plant, ADB’s $188 million, India’s $63 million, and Japan’s $41 million. No funds from China were disbursed during this period.