File photo of Bangladesh Bank

Dhaka, Bangladesh (BBN) – The central bank of Bangladesh has enhanced the foreign currency loan limit for the members of BGMEA and BTMA under its Export Development Fund (EDF) scheme to help boost the export earnings, officials said.

“It has now been decided to enhance the limit of US$ 20 million to $25 million for member mills of BGMEA and BTMA,” a notification said, issued by the Bangladesh Bank (BB) Monday.

Earlier, an authorised dealer (AD) bank may borrow maximum $20 million from the BB’s EDF against their foreign currency financing of input procurement for member mills of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Textile Mills Association (BTMA).

Talking to the BBN, a BB senior official said the central bank has enhanced the limit for the members of BGMEA and BTMA to facilitate the overall export earnings in the coming months.

He also said such enhancement will also help increase the inflow of foreign currency slightly in the market.

The demand for the US dollar has recently increased due to higher import payments pressure, particularly of capital machinery, petroleum products and consumer items including food grains, according to the market operators.

The total allocation for the EDF scheme remains unchanged at $3.0 billion.

The central bank may enhance the allocation of EDF further if necessary, another BB official hinted.

Currently, the exporters are allowed to get such low-cost foreign currency loan from the commercial banks with paying at the London Inter-bank Offered Rate (LIBOR) plus 2.50 per cent interest.

Under the existing provisions, the EDF financing is allowed for input procurements against back-to-back import letters of credit (LCs) or inland back-to-back LCs in foreign exchange, by manufactures producing final output for direct export and also by producers of local deliveries to manufacturers of the final export.