A case study on Bangladesh Bank raises Export Development Fund (EDF)

Export plays a very important role in our economy to facilitate the flow of foreign currency. To promote
export government through Bangladesh Bank has created Export Development Fund (EDF). EDF is
expected to contribute to a sustained export drive and long term development of Bangladesh exports by
assuring a continued availability of foreign exchange to meet the import requirements.
Recently central bank of Bangladesh has increased the amount of EDF by 25 percent, to US$ 1.5 billion
from US$ 1.2 billion. This has been done to meet the growing demand of countrys exporters. The limit of
single borrower has also increased from $ 12 million to $ 15 million. Textile Mills Association (BTMA),
Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Dyed Yarn
Exporters Association (BDYEA) and Bangladesh Knitwear Manufacturers and Exporters Association
(BKMEA) are eligible to get the benefit from the fund. Currently, exporters are allowed to get such
foreign-currency loan paying at the London Inter-bank Offered Rate (LIBOR) plus 1.50 percent interest
instead of previous 2.50 percent. Central bank has declined the interest rate to make the thing easy for the
exporters. EDF is payable by the banks upon receipt of export proceeds within 180 days from the date of
disbursement.
To get the loan from Bangladesh Bank exporters require making application to enlisted banks in
prescribed manner. The particular branch of the bank will apply to Bangladesh bank as per procedure.
Though EDF has been formed to assist non- traditional export items, it just concentrates itself on garment
sector. Many other non -traditional sectors want to avail themselves of the fund such as shipbuilding but
Bangladesh Bank has refused to provide support from this fund. It should widen its area of support in
other fields. The interest rate over the fund should be minimized to make the loan more popular among
the exporters. Proper utilization of the allocated EDF will lead to cost savings of the exporters and it will
ensure the long term export growth.
From the above analysis I have found following question:
1) Why did Bangladesh Bank increase the amount of the fund?
2) Why have other non-traditional export sectors been left out from getting the benefit of the fund?

Reference:
1) Bangladesh Bank raises export development fund allocation. Bangladesh Business News.
Available from: http://www. Bangladesh Business News.com/10/30/2014
2) Tanvir Hussain, Bangladesh Bank sets Tk 120cr loan limit from EDF. The Financial Express.
Available from: http://www.thefinancialexpress-bd.com/ 24/06/2014
3) Makhluk, Export Development fund by bank all, published 2/11/2012
4) Simplification of Policies for availing Export Development Fund (EDF) - Feb 201 by BUILD
5) Monetary policy statement, July-December 2014