The Bangladesh Bank has slashed interest rate of its Export Development Fund (EDF) by one percent, responding to the demands of export-focused industry owners.
A circular from the central bank on Sunday announced the new interest rate would be applicable for loans taken from the EDF for the next six months starting from Dec 15.
It said the EDF interest rate would be 1.5 percent with the London Interbank Offered Rate (LIBOR). The rate was previously 2.5 percent plus LIBOR.
When approached, the central bank’s Executive Director Md Ahsanullah said: “The Bangladesh Bank has lowered the EDF interest rate considering the overall situation and demands of the businesses.”
The EDF is a Bangladesh Bank fund of foreign currencies that provides loans to the exporters. The fund has a current reserve of $ 1 billion.
The LIBOR is what the banks charge each other for short-term loans in the London Interbank Market. It serves as a global benchmark for the banks for short-term interest rates.
Bangladesh Bank used to finance other commercial banks from the EDF fund on one percent interest rate with the LIBOR. The commercial banks in turn used to add 2.5 percent interest with the LIBOR when loaning the exporters money.
From now on, the central bank will add 0.5 percent interest with LIBOR while funding. The banks will charge the businessmen 1.5 percent interest with the LIBOR.
Led by the BNP, the 18-Party Opposition alliance had enforced several spells of shutdowns and blockades of roads, railways and waterways to press for a non-party caretaker government to supervise the general election.
BNP’s key ally Jamaat-e-Islami has been waging violent street agitations to protest against the conviction and execution of its leaders on war crimes charges.
The recent spate of violence has left the economy reeling and businesses have repeatedly urged the political parties to not enforce violent programmes.
Exporters, particularly those exporting readymade garment products, claimed they were unable to ship their products in time due to shutdowns and blockades. In many cases, they had to use costly air cargo.
Bangladesh’s apex business platform, the FBCCI, readymade garment manufacturers and exporters associations BGMEA and BKMEA have been demanding measures from the central bank to overcome the losses.
Source: bdnews24
