BB to enhance EDF to $800m from $600m to boost exports – Financial Express Bangladesh

FE Report

The central bank is going to enhance soon the allocation for the export development fund (EDF) to US$ 800 million from $600 million to meet the growing demand of the country’s exporters, officials said Wednesday.

“We have increased the amount of EDF allocation in line with the proposals of the country’s exporters,” a Bangladesh Bank (BB) high official told the FE.

The new measure would help boost the country’s export performance, he said adding: “The other provisions related to EDF would remain unchanged.”

It has been decided to increase the size of EDF to $800 million from the existing $600 million, source said.

The EDF is likely to increase, it’s true, but it is difficult to ‘elaborate on the amount’, Executive Director of the department concerned at BB Md. Ahsan Ullah told the FE.

The BB official also said the central bank was providing the re-financing facilities to the exporters through commercial banks as a short-term liquidity support.

“It will help the country’s exporters meet their short-term liquidity crunch,” export sector sources said.

The Bangladesh Bank should have increased the allocation of EDF much earlier considering the country’s overall export growth.

The EDF loan disbursements to authorised dealer-banks (ADs) in USD are charged interest for six months at LIBOR+1 per cent, with the ADs charging LIBOR+2.5 per cent rate to manufacturer-exporters, according to the circular.

But the ADs have to repay the EDF amount within six months (180 days), but it can be extendable by BB on case-to-case basis up to nine months (270 days) upon application to the central bank explaining the necessity of longer period for repatriation of export proceeds.

A single manufacturer-exporter can take 80 per cent of EDF against export Letters of Credit (LCs) or maximum $10 million, whichever is lower.

EDF loans to a single manufacturer-exporter up to US$ 1.50 million will be charged interest at the rate of six-month LIBOR+1 per cent. In addition to US$ 1.50 million (from the same AD or from up to two other AD banks), the interest rate will stand as before, i.e. six months’ LIBOR +2.5 per cent, the BB master circular said.

The EDF was created in 1988 with a view to facilitating export trade of the country.