Exporters to Access Offshore Dollar Loans at 8%

In a decisive step to reduce financing costs and enhance the competitiveness of Bangladeshi exporters, the Bangladesh Bank is set to introduce offshore dollar loans at an interest rate of 8%, significantly lower than current domestic borrowing rates of 14–16%. The central bank is expected to issue an official circular soon, outlining the operational framework for this initiative.

The new facility will allow exporters to use the funds for day-to-day operational expenses, including wages, utility bills, and other working capital requirements. Repayment will be made from export proceeds in foreign currency, easing pressure on domestic banks and protecting the nation’s foreign exchange reserves.

Banks will also have the option to convert borrowed dollars into taka through currency swaps without additional interest costs, providing exporters with flexibility in managing their cash flows. The loan amount will be linked to export orders; for example, if an exporter secures a $100 order and uses $60 to import raw materials via a letter of credit, they may borrow up to $40 under this offshore facility to cover remaining operational costs.

Loans will be extended based on established banker-client relationships, with maturities ranging from three months to one year. No strict lending cap will be imposed, allowing banks discretion to assess client needs.

The initiative comes amid a reduction in the Export Development Fund from $7 billion to $2.2 billion under IMF programme conditions, significantly limiting access to low-cost foreign currency financing.

Economists and industry leaders have welcomed the move, noting that exporters face rising production costs and declining global demand. Mahmud Hassan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association, described the step as highly positive but suggested the interest rate could be lowered to 6–7% to align with rates under other funds.

Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, emphasised that success hinges on timely execution of export orders and repatriation of foreign earnings. Fahmida Khatun, executive director of the Centre for Policy Dialogue, called for rigorous vetting to prevent misuse, while former World Bank economist Zahid Hussain highlighted the need for borrowers to bear exchange rate risks themselves.

Overall, the offshore dollar facility is expected to improve liquidity, reduce financing costs, and strengthen the global competitiveness of Bangladesh’s export sector while safeguarding the country’s foreign currency reserves.