The Bangladesh Bank (BB) has decreased the size of the Export Development Fund (EDF) from $7 billion to $4.77 billion as part of its compliance with the International Monetary Fund’s (IMF) requirements to calculate foreign exchange reserves according to international standards. By September, the size of EDF loans will be further reduced to $2 billion. The IMF’s recommendation to exclude EDF loans from the reserve calculation has put pressure on the central bank, resulting in a decline in foreign exchange reserves from $46 billion in December 2021 to $29.8 billion in May 2023. To address this, the government has established a new fund to provide low-interest loans to exporters for raw material imports. The EDF has historically played a crucial role in financing export-oriented industries like textiles, leather, and pharmaceuticals.
BB Reduces EDF Fund in Line with IMF Guidelines
Economic Tag: Central Bank
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