BB resets EDF loan ceiling

Staff Reporter :
Bangladesh Bank (BB) downsized the borrowing ceiling from Export Development Fund (EDF) to the manufacturers and exporters for reducing further pressure on forex reserves.
”It has been decided to reset the ceiling to $10.00 million from $15.00 million for input procurements under back to back LCs (BBLCs) against relevant export orders”, according to the central bank’s Foreign Exchange Policy Department (FEPD) circular on yesterday.
BB also slashed EDF support to $20 million from $25 million to the imports under BBLCs by individual member mill of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Textile Mills Association (BTMA).
As per circular, it reduced the borrowing limit for a member of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) to $15 million and for a member of the Bangladesh Dyed Yarn Exporters Association the limit shrieked by 50 percent from $20 million to $10 million.
Under the latest circular, the maximum eligible limit for individual exporter of leather goods and footwear sector has been set at $15 million.
For input procurements, the central bank first introduced financing facilities in foreign currency to the exporters in 1989 with a mere $3.00 million. Currently, the EDF size is nearly $ 6 billion which was $7 billion a year ago. The interest rate on the loans disbursed from the fund is 4.50 percent.
However, according to the current data from BB, the foreign exchange reserves ammounted to $ 31.14 billion, which can cover the country’s imports for nearly five months if monthly imports remain within the range of $ six billion. The reserve coverage would go down if the repayments of other loans are taken into account.