Bangladesh's Export Development Fund reduces by $1 bn

28 Jan '23

2 min read

Pic: ASMT / Shutterstock.com

Bangladesh’s Export Development Fund (EDF) set up to help exporters with foreign currency has dropped by $1 billion to $6 billion, a development that may ease pressure on forex reserves. Bangladesh Bank spokesman Mezbaul Haque said businesses were borrowing less from the fund as the central bank formed an alternative fund in local currency.

Set up in 1989 with a tiny amount of reserves, the EDF amount gradually increased to $7 billion. Exporters can pay off their loans from this fund from their export earnings. Exporters can borrow from the EDF at a 4 per cent interest rate.

The country, whose forex reserves were under pressure, largely due to the global economic crisis, reached an initial agreement with the International Monetary Fund (IMF) for a $4.5 billion loan to build a much-needed buffer.

The central bank was advised by the IMF to exclude illiquid assets, such as the EDF, from the reserves calculation, Bangladeshi media outlets reported.

Earlier in January, the central bank set up a Tk 100-billion Export Facilitation Pre-finance Fund, allowing exporters to borrow money at 4 per cent interest for 180 days.

Exporters, however, can't take loans from the EFPF if they have already borrowed from the EDF.

The country’s reserves fell to $32.48 billion as of January 18 from $45.2 billion a year earlier.

Fibre2Fashion News Desk (DS)

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