EDF raised to $7bn on growing demand

The size of Export Development Fund (EDF) has been increased to $ 7 billion from $ 6 billion to meet the growing demand among exporters.

The board of directors of the Bangladesh Bank in its meeting on Sunday approved of the increase in fund size, said Bangladesh Bank Executive Director and Spokesperson Md Serajul Islam.

The fund has been raised to $ 7 billion from $ 6 billion in two phases which has already made disbursement among exporters.

Amid the Covid-19 pandemic, the central bank increased the size of the fund several times to boost export earnings, added a BB official preferring to remain unnamed.

In June 2021, the EDF went up to $ 6 billion from $ 5.5 billion while the fund rose to $ 5.5 billion from $ 5 billion in March of the year. It increased to $ 5 billion from $ 3.5 billion in April 2020.

The growing demand and low interest rate of lending from the EDF prompted the central bank to increase the size of the fund.

Earlier on April 7, 2020, BB lowered the interest rate to 2 per cent on its EDF for the first time following a downturn in the country’s economic activities created by the Covid-19 pandemic.

Before that the interest charge was a six-month London Interbank Offered Rate (LIBOR) plus 1.50 per cent.

Mohammad Hatem, executive president, Bangladesh Knitwear Manufacturers and Exporters Association, said they urged the government to increase the EDF size several times considering the high price of raw materials.

“The government decided to raise it slightly, but $ 7 billion is not enough. If the government analyzes the price of raw material, it should double the fund size,” he added.

According to the Export Promotion Bureau, the export earnings from apparel sector rose by 30.73 per cent to $ 27.49 billion in July-February of FY22. It was $ 21.03 billion at the same time of the previous year.

Besides, according to the BGMEA utilisation declaration data, export order rose by 21 per cent.

Mohammad Ali Khokon, president, Bangladesh Textile Mills Association, urged the government to hike individual EDF loans from $ 30 million to $ 40 million.

He said the government is yet to take any decision about it but the raw materials’ price is increasing day by day. As a result, it is difficult to continue business operation with the help of $ 30 million EDF loans.

BGMEA vice-president Shahidullah Azim told The Business Post it is a piece of good news, and it will help raise export earnings.

Serajul Islam, however, said the central bank increased the EDF loans due to the growing demand among exporters.

“Right now we are not thinking about increasing the individual loan limit from the fund,” he pointed out.

The EDF was introduced by the central bank in 1988 with a capacity of $ 30 million, which went up in phases.

Members of Bangladesh Garment Manufacturers and Exporters Association and Bangladesh Textile Mills Association can take loans up to $ 30 million now.

The loan window is also available for several other sectors such as leather and leather products, ceramics and pharmaceuticals.