Bangladesh has signed a $540 million loan agreement with Japan for the third terminal of Hazrat Shahjalal International Airport, a cargo terminal, and associated facilities.

The interest rate on the loans is 1.30 percent and the repayment period is 20 years after a grace period of 10 years, the Japanese Embassy in Dhaka said in a statement today. 

IWAMA Kiminori, the Japanese ambassador to Bangladesh, and Shahriar Kader Siddiky, secretary of the Economic Relations Division, signed the loan deal in Dhaka. 

The fund is the third tranche of Japanese loans for the airport expansion project, amounting to a total of $2.21 billion.

The third terminal project with a total cost of Tk 21,300 crore started in December 2019. Of the total cost of the project, the Japan International Cooperation Agency is financing Tk 15,000 crore, while the government will provide the rest.

Prime Minister Sheikh Hasina soft-launched the third terminal on October 7 this year, but it will be used by airlines later. 

The goal is to meet the rising aviation demand, expand airport capacity, improve accessibility, and fortify security, contributing significantly to Bangladesh's economic growth, according to the statement. 

The expanded airport will play a pivotal role in enhancing the connectivity in the region, it said.