EDF’s size widenes further

Economic Reporter :
The Bangladesh Bank has widened the size of Export Development Fund (EDF) to $5.5 billion from $5 billion following the increasing demand of the exporters.
Kazi Sayedur Rahman, Deputy Governor of the central bank, revealed the information on Saturday.
Earlier, the BB slashed the interest rate on loans from the EDF by .25 per cent as part of the government-announced stimulus packages to support the exporters to combat the impact of Covid-19 outbreak.
Exporters are getting loans from this fund at 1.75 percent interest rate. The central bank is providing the facility to the exporters, who are affected badly by the pandemic, to increase their competitiveness in the international market. According the latest data of the BB, some 1,670 exporters have taken loans worth over $492 crore from the EDF fund till the date.
In November last year, the central bank reduced the interest rate on loans from the EDF following demand from the exporters in the context of a fall in export earnings in the first four months of the current fiscal year.
As per the revised rate, the banks were allowed to charge the exporters maximum six-month USD LIBOR (London Interbank Offered Rate) including another 1.5 per cent for loans from the EDF. The six month LIBOR rate was 2.65 per cent in January last year. The rate, however, dropped to 1.23 per cent on Monday.
If the LIBOR rate was taken into consideration, the applicable interest on exporters on loans from the EDF was 2.73 per cent before the revision.
The BB introduced the EDF in 1988 with a size of $30 million, which has gradually increased. Banks can borrow funds in US dollars from the EDF against their foreign currency loans to manufacturer-exporters for input procurements.
Such extended banking facility would be applicable only to important purposes including emergency foreign transactions.