It has proposed that Spanish companies be allowed to participate in projects financed under its credit line
Representational image of Spain-Bangladesh flag. Photo: Collected
“>
Representational image of Spain-Bangladesh flag. Photo: Collected
Highlights
- Spain would provide commercial loans, technical assistance, feasibility studies
- Spanish companies will have to be allowed to participate in projects
- Spanish goods, services to be given preference in those projects
- Bangladesh already has similar agreements with China, India, Japan South Korea
- Spain first proposed a similar agreement in 2024
- Discussions stalled after fall of AL govt
- Spanish investments abroad amount to approximately $50b
- Only $8.35m in foreign direct investment came to Bangladesh from 2001-24
Spain wants to finance the implementation of development projects in various sectors of Bangladesh. To that end, the European country has proposed signing a protocol agreement to strengthen mutual cooperation in the economic and financial sectors.
Under the proposed agreement, Spain would provide commercial loans, technical assistance, feasibility studies and financing for similar activities in Bangladesh, modelled on frameworks used by the Organisation for Economic Co-operation and Development (OECD).
It has proposed that Spanish companies be allowed to participate in projects financed under its credit line.
It has also requested that Spanish goods and services be given preference in those projects.
Spain recently submitted the proposal to the government, which has responded positively. Following this, the Economic Relations Division (ERD) prepared a draft agreement. Opinions are now being sought from all ministries and divisions.
A finance ministry official, speaking on condition of anonymity, said Bangladesh already has similar agreements with China, India, Japan and South Korea. Although Türkiye has also proposed such an agreement; Bangladesh has yet to consent.
The official said the arrangement could open a new financing window for Bangladesh’s development projects, especially as major development partners such as the World Bank, the Asian Development Bank (ADB) and the Japan International Cooperation Agency (Jica) have recently been proposing financing at commercial interest rates.
Sources said the framework protocol has been designed to support financing in transport infrastructure, renewable energy and other energy infrastructure, information and communications technology, cybersecurity in the telecommunications sector, water and solid waste management, agri-food industries, innovation, digitalisation, education and healthcare.
Spain would also be able to finance projects in any other sector if both countries agree. Particular emphasis would be placed on small and medium-sized enterprises and projects aimed at addressing the impacts of climate change.
The official said Bangladesh has substantial financing needs in these sectors, making the agreement beneficial for both countries. Bangladesh would gain easier access to funding for economic and social development, while Spanish companies would benefit from greater internationalisation.
Infograph: TBS
“>
Infograph: TBS
He added that Spain first proposed a similar agreement to the then Awami League government in 2024. Discussions stalled after the change of government but have now resumed following the proposal’s resubmission to the new administration.
The draft agreement also calls for the establishment of a bilateral working group, which would meet annually or at the request of either signatory. Experts from both countries would be able to participate in the meetings.
Under the agreement, loan proceeds could not be used by Bangladesh to pay customs duties, taxes or other levies on goods and services related to projects. The loans would be sovereign-guaranteed, with both parties remaining subject to their respective national laws.
Both countries would also reaffirm their commitment to combating corruption. In particular, no third party could be directly or indirectly involved in international transactions under the agreement. If evidence of corruption, misconduct or unlawful benefit is found, the Spanish government would have the authority to suspend financing, withdraw funding or demand early repayment of loans.
A former finance secretary said that while the tied-loan nature of the arrangement would create some dependence on Spanish products, it would also help Bangladesh strengthen its capabilities in areas such as advanced European technology and cybersecurity.
He, however, cautioned that Bangladesh would need to be careful during project selection and negotiations to ensure that interest rates and conditions do not place undue pressure on the country’s macroeconomic stability.
According to data from the Export Promotion Bureau (EPB), Bangladesh exported goods worth $2.84 billion to Spain during the first nine months (July-March) of FY2025-26. Major exports included knitwear, woven garments, home textiles and leather products.
Meanwhile, Bangladesh Bank data show that Bangladeshi businesses and investors imported goods worth $147 million from Spain during FY2024-25. Major imports included capital machinery, olive oil, chemicals and industrial raw materials.
In one of its publications, the Dhaka Chamber of Commerce and Industry stated that Spanish public and private sector investments abroad amount to approximately $50 billion. Of that amount, only $8.35 million in foreign direct investment came to Bangladesh between 2001 and June 2024, a very small share of Spain’s global investment outflows.
In 2021, a Bangladeshi delegation led by then railways minister Nurul Islam Sujan visited Spain at the invitation of the country’s minister for transport, mobility and urban agenda. During the visit, Nurul Islam Sujan held a meeting with Spanish Transport Minister Raquel Sánchez Jiménez, who expressed interest in investing in Bangladesh Railways.
About The Author
