Bangladesh awaits $1 billion Saudi funding to bolster fertilizers imports

Bangladesh is on the verge of receiving a $1 billion loan from the International Islamic Trade Finance Corporation (ITFC), a member of the Islamic Development Bank based in Saudi Arabia. The funds are earmarked to finance the import of over one million metric tonnes of urea, vital for the country’s agriculture, through government-to-government deals and international tenders. This initiative comes in response to concerns voiced by the Agriculture Ministry regarding a potential shortfall of urea for the peak Boro planting season in December 2024.

The financial support from ITFC, historically extended primarily for fuel imports, marks a pivotal shift as it is the first time Bangladesh has sought foreign loans explicitly for fertilizer imports. This strategic move was deliberated in a recent meeting attended by ITFC’s Chief Operating Officer Nazeem Noordali and a Bangladeshi delegation led by ERD Secretary Shahriar Kader Siddiky, alongside representatives from various national sectors.

The urgency of this loan correlates with a significant drop in fertilizer imports, which decreased to $2.7 billion in FY24 from $4.91 billion in FY23, reflecting a 45% reduction. This decline stems from a decreased number of importers and a scarcity of foreign funding.

Projections from the Bangladesh Chemical Industries Corporation (BCIC) indicate a urea demand of 1.8 million metric tonnes through March 2025, with an existing stock of about 0.5 million tonnes. Annually, Bangladesh’s fertilizer requirement stands at 6.8 million metric tonnes, including urea, TSP, and DAP, with a substantial portion met through imports due to local production shortfalls exacerbated by a gas shortage affecting fertilizer factories.

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In addition to urea, the Bangladesh Agricultural Development Corporation (BADC) is set to import 30,000 metric tonnes of MOP fertilizer from Russia’s JSC Foreign Economic Corporation “Prodintorg” and 120,000 metric tonnes of DAP from companies in China, Morocco, and Saudi Arabia. These procurements underscore the ongoing efforts to stabilize fertilizer supply amid fluctuating global markets and local production challenges.

Furthermore, BCIC’s engagement with SABIC Agri-Nutrients Company for the purchase of 30,000 tonnes of bulk granular urea reinforces the broader strategy to enhance agricultural output and food security. The Bangladesh Central Bank has also called on private banks to prioritize issuing Letters of Credit for fertilizer imports, highlighting the national priority of ensuring agricultural sustainability.