Dhaka, Bangladesh (BBN)- The central bank of Bangladesh has increased the allocation for the export development fund (EDF) by 20 percent to US$ 1.2 billion from $ 1.0 billion to meet the growing demand from the country’s exporters.
“We’ve enhanced the allocation for the EDF scheme to facilitate the country’s exporters gear up their business activities,” a senior official of the Bangladesh Bank (BB) told BBN in Dhaka.
The central banker the BB is providing the re-financing facility to the exporters through commercial banks as a short-term liquidity support. “Other provisions related to the EDF will remain unchanged.”
Currently the exporters are getting the foreign currency loans through commercial banks at the interest rate of London Inter-bank Offered Rate (LIBOR) plus 1.50 percent instead of 2.50 per cent earlier, as the central bank on December 15 last year slashed the interest rate by 1.0 percentage point.
The BB slashed the interest rate for its EDF scheme for the next six months to help exporters recover their losses caused by the political unrest that took place late last year.
“The exporters will get the foreign currency loans at the interest rate of LIBOR plus 1.5 per cent until June 30 this year,” the BB official explained.
Under the existing provisions, the EDF financing is offered for input procurement against back-to-back import letters of credit (LCs) or inland back-to-back LCs in foreign exchange, by manufacturers producing final output for direct export and also by producers of local deliveries to manufacturers of final export.
The EDF loans from the central bank are payable by the banks upon receipt of exports proceeds within 180 days from the date of disbursement, extendable by the BB up to 270 days in the event of a longer period for repatriation of export proceeds, according to the central banker.
The country's exporters particularly apparel sector welcomed the BB's latest move saying that it will able to bring a positive impact on the export businesses in the near future.
"It will help the country's exporters to meet their short-term liquidity requirement with lower interest rate," Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told the corrrpondent earlier.
He also said the banks should take initiative for providing such loan to entrepreneurs’ specially medium and small ones.
BBN/SSR/AD-07Apr14-10:17 am (BST)
