The Bangladesh Bank has further reduced the volume of the Export Development Fund (EDF) to $4.77 billion from the existing $5 billion.
The fund has gradually decreased since December last year. It was at $7 billion at the beginning of December and reduced to $6 billion later that month.
The fund then dropped to $5 billion in April this year and finally, it’s now been brought down to $4.77 billion.
The move came to comply with the IMF’s requirement that states the calculation of foreign exchange reserves needs to be changed in accordance with international standards.
According to central bank officials, the amount of EDF loans will be further decreased to $2 billion by September.
Recently, the IMF suggested that the Bangladesh Bank exclude EDF loans from total reserve calculations, which put pressure on the central bank because doing so would further reduce the number of foreign reserves.
The country’s foreign exchange reserve, which included EDF loans, fell from $46 billion in December 2021 to $29.8 billion on May 8.
In January 2023, the government established a new fund with Tk10,000 crore to address this issue.
This fund will offer low-interest loans to exporters for the import and procurement of raw materials necessary for production in export-oriented industries.
To make it easier for manufacturer-exporters to access financing in foreign currencies for the purchase of components, the Export Development Fund was established in Bangladesh in 1989.
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