Govt to ink 2 deals with ITFC next week

Bangladesh for the first time is set to receive loans from the Islamic Trade Finance Corporation (ITFC) to import fertiliser, officials said on Thursday.

The government would sign two deals with the Jeddah-based corporation next week to get the first instalment of the $100 million credit to import fertiliser and major agricultural inputs, Economic Relations Division (ERD) officials said.

Meanwhile, the ITFC agreed to provide $500 million in short-term loans to Bangladesh to import fertiliser.

For long, ITFC has been helping Bangladesh by providing billions of dollars to purchase fuel oil from the international market.

The lender also recently confirmed another $500 million loan to Petrobangla to source liquefied natural gas (LNG) from the overseas market.

An ERD official said, "The ITFC usually finances fuel oil imports. Recently, it confirmed funding LNG imports. Now for the first time, it has decided to finance fertiliser purchase."

Bangladesh imports a huge amount of fertiliser to produce cereal and other crops.

Usually, the government imports fertiliser with money from its exchequer.

"With the ITFC financial support, the pressure on foreign exchange reserves would ease to some extent," the ERD official said.

Bangladesh imports over 5.5 to 6.4 million tonnes of fertiliser annually to meet its demand, with the approximate value standing at $1.36 billion in 2023.

The country's key import partners in 2023 included Morocco, Canada, and Saudi Arabia.

It faces challenges in timely fertiliser imports due to factors like gas shortages affecting domestic production and dollar shortages impacting payments.

According to government statistics, Bangladesh's urea fertiliser demand in FY26 is nearly 2.7 million tonnes, while the current stock stands at 0.57 million tonnes.

For non-urea fertiliser, including Triple super phosphate, Diammonium phosphate, and Muriate of potash, the demand is 3.2 million tonnes, with a current stock of 1.123 million tonnes.

Another ERD official said the $100 million loan deal was expected to be signed on September 10.

"We will borrow the remaining $500 million on the basis of our local fertiliser demand in the coming months."

The Murabaha loan deal will be signed between ERD and ITFC, while the Facility Term or operational agreement will be inked between the ITFC and the Bangladesh Agricultural Development Corporation (BADC) under the agriculture ministry.

ITFC, a member of the IsDB, is one of the key development partners of Bangladesh.

It provides nearly $1.3 billion to $2.0 billion in loans to the Bangladesh Petroleum Corporation (BPC) to purchase fuel oil from the international market. Bangladesh's major share of oil import payments is paid from the ITFC loan, a six-month credit.

The ITFC will charge a six-month SOFR and a 1.75 per cent interest for their $100 million lending, to be signed on September 10.