The International Islamic Trade Finance Corporation (ITFC) has confirmed a US$3.30 billion worth of trade-financing package for Bangladesh to facilitate import of fuel oil, liquefied natural gas (LNG) and fertiliser.
The financing will provide a crucial funding boost as the country grapples with foreign-exchange constraints in importing key energy and agricultural inputs.
The Bangladesh government and the ITFC signed the agreement at the ITFC headquarters in Jeddah on Monday, officials at the Economic Relations Division (ERD) and the Energy and Mineral Resources Division (EMRD) said on Wednesday.
ERD Secretary Shahriar Kader Siddiky and ITFC Chief Executive Officer Eng. Adeeb Yousuf Al Aama signed the agreement on behalf of their respective organisations.
Bangladesh also held high-level negotiations with the ITFC in Jeddah from June 27 to 30 to finalise the trade financing package.
"Both parties reached an agreement on June 29, and the financing agreement was signed on the same day," a senior ERD official said.
Bangladesh also succeeded in reducing the financing spread by 5 basis points, bringing the interest margin down to SOFR plus 1.70 per cent from SOFR plus 1.75 per cent.
The ITFC typically extends six-month trade financing facilities to Bangladesh to support import payments for fuel, energy and fertiliser. According to the ERD and the EMRD, the financing facility is designed to help meet the country's rising import bills for crude oil, LNG and chemical fertilisers during the upcoming fiscal year 2026-27.
The primary objective of the Jeddah negotiations was to determine the allocation of the financing among state-owned enterprises that depend heavily on syndicated Islamic trade finance.
Of the US$3.30 billion package, Bangladesh Petroleum Corporation (BPC) will utilise US$2.50 billion to import fuel oil.
State-owned Petrobangla will receive US$600 million to import LNG, helping safeguard supplies against potential disruptions stemming from the Middle East crisis.
In addition, US$200 million has been earmarked for the Bangladesh Agricultural Development Corporation (BADC) to import fertiliser and support domestic food production.
The ITFC, the autonomous trade finance arm of the Islamic Development Bank (IsDB) Group, has been a cornerstone of Bangladesh's import financing strategy for decades.
The partnership dates back to 1997, when the IsDB first financed petroleum imports for BPC. The responsibility was subsequently assumed by the ITFC following its establishment in 2008.
Between 2008 and the end of the current FY2025-26 cycle, the Jeddah-based lender has provided Bangladesh with a cumulative US$21.77 billion in trade financing.
Historically, the financing was used exclusively for fuel oil imports. However, changing economic conditions in recent years have led to a broader financing portfolio that now includes LNG and fertiliser imports.
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