The Bangladesh Bank is preparing to offer exporters offshore dollar loans at an interest rate of 8%, a significant reduction from the 14–16% charged on domestic currency loans. The central bank is expected to issue a formal circular shortly, detailing operational procedures and eligibility criteria for this new facility.
The initiative aims to lower financing costs, improve exporters’ liquidity, and strengthen Bangladesh’s position in the global market. Exporters will be able to utilise these loans for routine business operations, including employee salaries, utility bills, and other working capital requirements. Repayments will be made from export proceeds in foreign currency, mitigating pressure on local banks and contributing to the stability of the country’s foreign exchange reserves.
A notable feature of the facility is the option to convert borrowed dollars into taka through currency swaps, without incurring additional interest costs. The loan amount will be linked to confirmed export orders. For example, if an exporter secures an order worth $100 and opens a letter of credit for $60 to import raw materials, they may borrow the remaining $40 under the offshore facility to cover operational expenses.
Banks will have the discretion to provide loans based on established client relationships, with maturities ranging from three months to one year. No strict ceiling on lending has been imposed, allowing banks flexibility to assess each borrower’s needs.
| Feature | Key Details |
|---|---|
| Interest Rate | 8% per annum |
| Loan Tenure | 3–12 months |
| Eligible Use | Wages, utilities, working capital |
| Repayment | Export proceeds in foreign currency |
| Conversion | Currency swaps without extra interest |
| Lending Limit | Linked to export order values |
| Eligibility | Verified exporters with active LCs |
The programme addresses the shortfall caused by the reduction of the Export Development Fund from $7 billion to $2.2 billion under IMF programme requirements, which has constrained low-cost foreign currency financing for exporters.
Industry leaders have welcomed the move. Mahmud Hassan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association, praised the initiative but suggested reducing the interest rate to 6–7% to match other funding options. Syed Mahbubur Rahman, CEO of Mutual Trust Bank, highlighted that successful implementation depends on timely export execution and repatriation of earnings.
Fahmida Khatun, executive director of the Centre for Policy Dialogue, urged rigorous vetting of borrowers to prevent misuse of funds, while former World Bank economist Zahid Hussain cautioned that borrowers must bear the risk of exchange rate fluctuations themselves.
The new offshore dollar facility is expected to enhance financial capacity, reduce financing costs, and improve the international competitiveness of Bangladesh’s export sector while maintaining the stability of the country’s foreign exchange reserves.