Extend loan moratorium until Dec 2022: BJMA

Jute millers have urged Bangladesh Bank to extend the loan moratorium for another year considering the new covid situation, freight fare hike, high raw jute prices and negative export growth.

In a letter to the central bank on Sunday, Bangladesh Jute Mills Association (BJMA) Chairman Md Abul Hossain said they fear the loans could become classified if they don’t get extra time. “Some mills may even be forced to shut down, which could affect the economy,” according to the letter.

The central bank had provided loan relief until December 31 this year in phases considering the pandemic situation. Apex trade body FBCCI has also sought an extension of the loan classification facility till June next year.

There are around 350 jute and jute spinning mills in Bangladesh that have bank loans of around Tk 15,000 crore – an estimated 25 per cent of them classified.

According to the Export Promotion Bureau, despite the Covid-19 pandemic, the jute sector earned $1.16 billion in the 2020-21 fiscal year, registering a 31.63 per cent growth. But in the first five months of FY22, export performances fell 17.45 per cent to $457 million compared to the same period of the previous FY.

Jute exporters said that high raw jute prices and rising freight costs are the leading causes of export decline.

“Lira’s deprecation against US dollar is one of the main reasons for export decline,” Esrat Jahan Chowdhury, the Bangladesh Jute Goods Exporters Association director, told The Business Post.

BJMA chief Hossain said the pandemic and high price of raw jute forced some mills to shut down while many continued operating partially. On top of it, the export earnings had been falling since April.

“So we urge the government to postpone loan repayment until next December,” Abul Hossain told The Business Post.

He said that only 2 per cent of the association’s members received funds from the government’s stimulus package to overcome the pandemic shock.

“Those who didn’t get fund, particularly the small and medium entrepreneurs, are trying to recover from loss. If the government does not consider the real situation, then we’ll be unable to continue business and there are fears that the loans will become classified,” he said.