Bangladesh has struck a loan agreement with Japan worth $540 million for the third terminal of Dhaka airport, a cargo terminal, and other facilities.

The deal secures the third and final tranche of support from the Japan International Cooperation Agency (JICA) for the construction of the third terminal at Shahjalal International Airport.

The interest rate on the loans is 1.30 percent – twice as much the interest rate agreed for the previous tranche signed in August 2020, according to statement released by the Japanese Embassy in Dhaka on Sunday.

The repayment period is 20 years after a grace period of 10 years.

For consultancy, the interest rate for the loan reaches 20 times with the new agreement.

Japan’s Ambassador to Bangladesh Iwama Kiminori, and the Economic Relations Division Secretary Shahriar Kader Siddiky signed the loan deal in Dhaka.

The three tranches of Japanese loans for the airport expansion project amount to a total of $2.21 billion.

Prime Minister Sheikh Hasina soft-launched the third terminal on Oct 7 this year 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, according to the embassy.