Bangladesh Bank on Sunday extended the deadline for export proceeds repatriation in its bid to help entrepreneurs withstand the fallout of the coronavirus pandemic that continues to keep shipments in the negative.
Export receipts declined 1.45 percent year-on-year to $25.86 billion in the July-February period of the current fiscal year as the surge in coronavirus infections continues to ravage demand.
In a circular on Sunday, Bangladesh Bank said until June this year, exporters would get seven months to bring their export earnings.
The central bank, in March last year, allowed exporters to fetch their export proceeds within seven months from the date of shipment instead of the previous four months. The facility is scheduled to expire this month.
"It is a good initiative," said AK Azad, managing director of Ha-Meem Group, one of the leading exporters of readymade garments and denim fabrics. He said problems related to exports still persist. "We are anxious. Only 10.5 percent of people have been vaccinated. People are still dying. A large number of people are in hospitals." "The situation is similar in Europe. England is still in lockdown," he said.
The entrepreneur said businesses might need another stimulus package to help them continue businesses. At the same time, the BB should consider a new package so that factories, which have been shut, could reopen and ensure jobs for the jobless, he said.
Azad, a former president of the Federation of Bangladesh Chambers of Commerce and Industry, said the central bank should allow a loan rescheduling facility so that borrowers can reschedule loans without any down payment in logical cases.
The repayment period for the back-to-back letters of credit opened under suppliers' and buyers' credit was earlier extended to one year from six months. This means importers can pay back the loans within a year against imported goods. The support, set to expire this month, has been extended until June.
Buyers' credit refers to the finance for the payment of imports arranged by the importer (buyer) from a financial institution outside of the country. The suppliers' credit is the credit extended for imports directly by the overseas supplier instead of a bank or financial institution. In March last year, the central bank extended the repayment period for loans under the export development fund (EDF) to six months from three months. Exporters will enjoy the support until June. The deadline of the facility was due to expire this month.
The BB allowed exporters to receive finance from the EDF to adjust their loans under the suppliers' and buyers' credits. The support will continue until June as well. The central bank has extended the policy supports as economic activities are yet to get momentum from the pandemic-induced slowdown, a central bank official said. In addition, some European countries, which are the major destinations for the country's exported items, now face a fresh wave of infections.
"The policy supports extended by the central bank will help the export sector to a large extent," said Kutubuddin Ahmed, chairman of Envoy Group, a conglomerate with a focus on readymade garments and textile manufacturing.
But there are lots of uncertainties in the export sector as some European countries are facing second and even third waves of coronavirus infections. "This will deal a major blow to exports," he said. The export sector has rebounded in recent days, but the spread of infections has again created a barrier to keeping the momentum up, Ahmed said.