Bangladesh to receive $1.0b in soft loan

Funds meant for funding ERL’s oil-refinery-expansion project

Bangladesh’s development pursuit may get a boost as the Islamic Development Bank (IsDB) chief will come here early next month with the confirmation offer of US$1.0-billion assistance in the first go.

The Jeddah-based lender might also offer extended support to Bangladesh government from its newly introduced IsDB Concessional Fund (ICF), a new lending facility of the IsDB, said an Economic Relations Division (ERD) official on Monday.

The IsDB President, Dr Muhammad Al Jasser, would arrive in Dhaka on September 2 and sit for different official programmes across on September 3, he added.

“His visit would extend our relations with IsDB. It will strengthen the bilateral relations of Bangladesh with the development partner,” said ERD Additional Secretary Dr Md Mizanur Rahman.

He said in the presence of Prime Minister Tarique Rahman and the IsDB President, they were going to sign a deal on $1.0 billion worth of loan for financing the Easter Refinery Limited (ERL)’s oil-refinery-expansion project.

The loan will be utilised to enhance the ERL’s oil-refining capacity to 4.5 million tonnes from the existing 1.5 million tonnes.

Mr Rahman says since the IsDB opened a 10-year-cycle ICF facility for the LDCs in February last, Bangladesh could avail up to $60 million worth of loan at a concessional rate. The interest rate for the ICF would be 1.5 per cent.

The ICF is a specialised financing facility to support 27 least-developed member-countries and vulnerable borrowers facing debt stress, fragility, or climate shocks.

According to the ERD, the IsDB President would take part in the official programme the day after his arrival.

He is expected to call on Prime Minister Tarique Rahman on September 3 when the $1.0-billion- loan deal will be signed between the ERD and the IsDB.

Besides, Mr Jasser might call on the ministers for Finance, Road Transport and Bridges, and Power, Energy and Mineral Resources the same day separately. The ERD official said the government would seek extended support from the IsDB in the years to come as Bangladesh needs huge investments for its energy and infrastructure development.

“We will also discuss the next Member Country Partnership Strategy (MCPS) for Bangladesh (2027-2030) with the President to finalise it,” he added.

The IsDB Regional Hub Dhaka launched the last Member Country Partnership Strategy for Bangladesh (2024-2026) on April 29, 2024, with an estimated financing package of $5.15 billion to support the nation’s structural transformation.

Source: The Business Standard