Bangladesh plans to seek a $1.0 billion budget-support loan from Japan during Prime Minister Tarique Rahman’s upcoming visit in late October, officials have confirmed. The loan will be disbursed in two equal installments: $500 million for the current fiscal year and another $500 million for the following year. The four-day trip, scheduled for October 26, will center on deepening trade, investment, and economic cooperation, as Japan remains a critical partner for Bangladesh, which has depended on international aid to counter economic pressures stemming from global conflicts.
In the fiscal year 2025-26, Bangladesh received $3.11 billion in budget support from development partners to address economic disruptions, primarily to cover surging import costs for fuel oils, liquefied natural gas (LNG), and food. Key contributors included the World Bank, the Asian Development Bank (ADB), the Japan International Cooperation Agency (JICA), and the Asian Infrastructure Investment Bank (AIIB). The previous fiscal year saw $3.0 billion in budget-support credits, but no such funds have arrived in the last three months of the current fiscal year.
Negotiations are currently underway to secure an additional $100 million from the OPEC Fund for International Development (OFID), following a $110 million allocation in the fiscal year 2025. Unlike OFID, no discussions are taking place with JICA for budget support at this time. In the last fiscal year, Bangladesh received $316 million from JICA, while the year before saw $414 million. The upcoming request is intended to address rising fuel and LNG costs, which have been exacerbated by Middle East conflicts disrupting global supply chains.
Early-stage talks with the Asian Development Bank are ongoing for budget-support credits, though final agreements are unlikely before March 2025, according to officials. The economic strain began in early 2022, when Russia’s invasion of Ukraine triggered global inflation, reduced remittances, and depleted foreign-exchange reserves. In response, Bangladesh implemented austerity measures and sought a $4.7 billion loan from the International Monetary Fund (IMF), which was approved in January 2023.
Recent conflicts in the Middle East have further driven up fuel and LNG prices, forcing Bangladesh to allocate millions to subsidies. Government spending on energy subsidies has increased steadily, raising operating costs. To ease these pressures, officials are prioritizing budget-support funds to stabilize imports and foreign-currency reserves.
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