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The Bangladesh Bank on Sunday reduced ceiling on the US dollar loans from its Export Development Fund to manufacturers and exporters by $5 million with the aim of lowering pressure on reserves.
The central bank issued a circular in this regard on Sunday.
According to the circular, the ceiling has been reset to $10 million from $15 million for input procurements under back-to-back letters of credit (BBLCs) against relevant export orders to bring in a wider range of customers for EDF loans.
It means that exporters may have access to a smaller amount of funds from the EDF than they did previously.
The Export Development Fund (EDF) was established in Bangladesh in 1989 to facilitate access to financing in foreign exchange for input procurements by manufacturer-exporters.
Authorised dealers of banks can borrow US Dollar funds from EDF against their foreign currency loans to manufacturer-exporters for input procurements, the latest circular said.
Over the years, the EDF has played a key role in providing much-needed financing to the country’s export-oriented industries, particularly in sectors such as textiles, leather, and pharmaceuticals.
The central bank brought down the volume of the EDF to around $5.5 billion from about $7 billion after the country’s foreign reserve came under pressure.
The foreign reserves plunged to $31.24 billion on April 5 from $46 billion in August 2021.
The limit for imports under BBLCs by individual member mill of BGMEA and BKMEA was set at $20 million and $15 million, respectively, including $15.00 million for an individual exporter of leather goods and footwear sectors.
In addition, the maximum eligible limit for bulk imports by a member of the Bangladesh Textile Mills Association)has been kept unchanged at $20 million, while it has been reduced for member of the Bangladesh Dyed Yarn Exporters Association (BDYEA) to $10 million from $20 million.
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