WB’s $500mn fund to help Bangladesh export

The Bangladesh Bank (BB) is setting up a special fund to boost export with the help from the World Bank.

It will start off with $ 500 million.

But the fund will be ‘augmented’ once Bangladesh’s foreign currency reserve reaches the $ 25 billion mark, said governor Atiur Rahman.

“This will be a large fund. Exporters can take low-interest, long-term loans from it. This will have a positive impact on our export earnings.”

The central bank chief was speaking to bdnews24.com in Washington DC after attending the annual meeting of the World Bank (WB) and the International Monetary Fund (IMF).

There was $22.18 billion in the foreign reserve on Monday. One year ago, in October 2013, it was $16.68 billion.

“The World Bank has agreed to provide assistance in setting up a fund to help the export sector in Bangladesh,” said Kazi Sayedur Rahman, general manager of the Forex Reserve & Treasury Management Department of the Bangladesh Bank.

Negotiations with the World Bank regarding the matter have reached its final stages. “The fund will be set up in the next three to six months.”

“We’re hoping they (WB) will give around $500 million. The fund will be set up with that and we’ll continue to augment it from time to time.”

“This will have no connection to the Export Development Fund,” he said, asserting that it will be a special export fund from where loans can be taken out for any sector that relies on export.

“There will be a higher limit too.”

The new fund will be different from the Export Development Fund, which allows only specific sectors to take loans with comparatively shorter limits.

He also believed the fund will have a good effect on exports. As much as $30.19 billion was earned through exports in the previous 2012-13 fiscal, which was 12 percent more than the year before.

The goal for this 2014-15 fiscal was set at $33.20 million.

As for the annual meeting of the World Bank and the IMF, Atiur Rahman said: “The (Finance minister) led the main meetings. There have been several meetings on the sidelines and I took part in almost all of them. Bangladesh came up in all these discussions.”

“IMF head Christine Lagarde said Bangladesh was doing good in many sectors during a session on Future of Finance. It has maintained above 6 percent growth and stability amid the global economic crisis.

“She praised us for financial inclusions including mobile banking.”

The World Bank, he said, extended its support due to this ‘positive image’ they had of Bangladesh.

Finance Minister Abul Maal Abdul Muhith was present when Rahman was speaking to bdnews24.com at Alternative Executive Director Mohammad Tarek’s office at the World Bank’s head office.

The governor told the minister: “You’re reserve has grown a lot. Everyone tells me why this reserve money is not being brought to investment.”

“It’s not true that the reserve money isn’t going into investment,” said Muhith in reply. “They have been going in through EDF.”

The size of EDF has been augmented from $1 billion to $1.5 billion, the governor said. Loan limit, too, has been extended from $1200,000 to $1500,000.

“All our economic indexes are looking up. We are progressing… we’ve brought it up in the meetings,” he said when asked about the outcome of the annual meet.

“Our biggest achievement is the progress we maintained despite the global economic downtrend and other obstructions. Everyone praises Bangladesh now. This is very big for us.”

The annual meet of the WB and IMF was held at the US capital from Oct 10 to 13.