In order to promote international commerce, City Bank recently inked a $30 million loan deal with the OPEC Fund for International Development. The cash will be used to finance Bangladeshi importers and exporters, particularly in the fields of agricultural and green energy.
The agreement was negotiated at the OPEC Fund for International Development’s Vienna offices by Sheikh Mohammad Maroof, the bank’s chief business officer and additional managing director, and vice president Tareq Alnassar, according to a news statement.
“The OPEC Fund will help the flow of commodities during a period of supply chain disruptions by partnering with City Bank to offer trade credit to suppliers in Bangladesh, tackling constraints related to food hunger and climate change, according to Alnassar.
He stated that the OPEC Fund will assist import and export businesses, particularly those in the green energy and agricultural sectors, in obtaining funding and closing financial shortages.
We are excited to begin this important collaboration. According to Maroof, “this collaboration represents a significant turning point in our commitment to support Bangladesh’s economic growth and development.”
Our import and export-based businesses will be able to perform better thanks to the trade finance facilities. We anticipate collaborating closely with the OPEC Fund to fulfill these objectives, he stated.
According to the press release, the OPEC Fund for International Development is the only multilateral development finance agency with a worldwide mandate that solely lends money to non-member nations.
Since its founding in 1976, the organization has promoted social advancement and economic prosperity in low- and middle-income nations by collaborating with partners in developing nations and the international development community.
In the meanwhile, Bangladesh is anticipated to receive $20.8 billion in loans from the Asian Development Bank (ADB) over the course of the next four years as it attempts to quicken its economic expansion and become an upper-middle-income nation in less than ten years.
Based on papers from the Manila-based lender, the amount is 42.3 percent more than the $12 billion the country got in the preceding four years. Because the nation’s ability to repay has increased, $16.4 billion, or 78.85% of the anticipated funding, will be given as an ordinary capital resources (OCR) loan.
For the OCR element, the interest rate is almost market-based. The remaining portion of the loan will have concessions. The loans at near-market terms come with a five-year grace period and a 25-year payback horizon. The interest rate is equal to 0.75 percent + SOFR.
According to statistics from the Federal Reserve of Bank of New York, the Secured Overnight Financing Rate (SOFR), which is taking the place of the London Interbank Offer Rate (LIBOR), was 5.32 percent on Thursday.
The repayment plan for concessional loans is same, except the interest rate is set at two percent. The ADB has established a loan pipeline for 92 projects across seven sectors between 2024 and 2027, as evidenced by the documentation pertaining to its country program.
The projects included the Dhaka Power System Expansion and Strengthening Project, the SASEC (South Asia Subregional Economic Cooperation) Dhaka-Chattogram Highway Improvement Project, the Mass Rapid Transit (MRT) Line-5 (Southern Route), and the SASEC South Corridor Improvement Project (Faridpur-Barishal Highway).
Today, the ministries and divisions will convene with the Economic Relations Division to finalize the ongoing projects. Regular OCR loans have no set budget, although the ADB anticipates lending around $16.4 billion between 2024 and 2027, contingent on the preparedness of the projects being presented.
The estimated commitments for 2024, 2025, 2026, and 2027 are $2.3 billion, $4.2 billion, $4.9 billion, and $5 billion, respectively. According to its pipeline, the ADB would fund 12 projects in the fields of agriculture, food, nature, and rural development for $1.8 billion in 2024–2027; 14 projects in the energy sector for $2.9 billion; and 10 projects in the financial sector for $2.5 billion.
$5.9 billion for 18 projects in the transportation sector, $2.9 billion for 18 projects in the water and urban development sector, and $1.7 billion for five projects in the public sector management and governance sector. The initiatives are a reaction to Bangladesh’s obstacles.
According to the ADB, Bangladesh’s primary development concerns include a lack of infrastructure, limited private sector competitiveness, susceptibility to climate change, and regional disparities. It stated that it is also having difficulties with governance, social protection, human capital development, and employment creation.
