IMF Reviews Bangladesh’s Foreign Debt Risks, Repayment Pressure Expected to Rise Over Next Five Years

PNN News Desk | Dhaka

A high-level delegation from the International Monetary Fund (IMF) held a meeting with Bangladesh’s Economic Relations Division (ERD) to assess the country’s foreign debt situation, future repayment capacity, and financing risks.

The meeting discussed several important issues, including debt management, slower fund disbursement, and trends in budget support.

During the meeting held at the Secretariat on Tuesday, the IMF delegation sought detailed information about Bangladesh’s foreign debt costs, availability of concessional loans, use of market-based floating-rate loans, average borrowing costs, and possible repayment pressure in coming years.

ERD officials said Bangladesh’s foreign debt management has moved from a relatively low-risk position toward a medium-risk level.

They said declining access to low-interest and flexible-term loans has made new borrowing increasingly expensive.

In particular, several bilateral development partners, including Japan, are no longer providing loans under previous favourable conditions.

At the same time, Bangladesh’s dependence on floating-rate loans from multilateral institutions such as the World Bank and Asian Development Bank has increased.

According to ERD data, around 30 percent of Bangladesh’s total foreign debt portfolio in the 2024–25 fiscal year consisted of floating-rate loans. The share is believed to have increased further in the recently completed fiscal year.

Officials informed the IMF that repayment pressure on foreign loans will rise significantly over the next five years.

Between the current fiscal year and 2029–30, Bangladesh will need to repay around $26 billion in foreign debt instalments and interest.

They said nearly two-thirds of the total foreign debt repayment made by Bangladesh over the past 54 years since independence will become due within the next five years.

The meeting also focused on declining foreign loan disbursement.

The IMF asked why development project funding has slowed and why budget support from development partners has decreased recently.

In response, ERD officials said many projects approved during the previous government are currently under review. The government has also adopted a cautious approach regarding approval of new foreign-funded projects.

They said the temporary slowdown in development activities has affected fund disbursement.

According to the latest ERD information, around $41.73 billion in foreign loans are currently awaiting disbursement for various projects.

Meanwhile, from July to May of the current fiscal year, foreign loan disbursement declined by around 18 percent compared to the same period last year.

Changes in budget support were also discussed.

Bangladesh received a record $3.44 billion in budget support in the 2024–25 fiscal year, but the amount dropped to $1.56 billion in 2025–26.

The support may decline further in the current fiscal year.

Officials said budget support increased during the COVID-19 pandemic and after the Russia-Ukraine war to help countries manage economic pressure. However, global conditions have now changed.

They said recent geopolitical instability has increased the need for foreign financing.

It is worth mentioning that Bangladesh has moved away from the previous government’s $5.5 billion IMF loan programme.

Currently, the government is negotiating for a new three-year loan support package worth $4 billion to $4.5 billion under a revised reform programme.

As part of this process, an IMF delegation is staying in Dhaka for a five-day visit.