Relaunched pre-shipment credit to boost export trade: Experts

Under the initiative, Tk 5,000 crore has been allocated from the central bank’s existing Tk 10,000 crore Export Facilitation Pre-finance Fund. Banks will be able to access the fund at 2 percent interest and lend to exporters at a maximum of 5 percent. 

Exporters can use the facility to cover expenses incurred before shipment of goods, including procurement of raw materials, production, and other operational costs. 

The move has been widely welcomed by exporters, who say the low-cost financing will help overcome prolonged stagnation in the sector. 

They also believe it will ease liquidity constraints, enabling them to maintain regular wage payments for workers even during periods of global slowdown, thereby reducing the risk of labour unrest. 

President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Mahmud Hasan Khan Babu, told BSS that the initiative would significantly support export-oriented businesses. 

“The present government, led by Prime Minister Tarique Rahman, has taken swift decisions in favour of exporters. The allocation of Tk 5,000 crore at 5 percent interest will be highly beneficial, and we expect exports to grow considerably,” he said. 

Bangladesh Bank noted that export-oriented sectors, including ready-made garments, are currently under pressure due to ongoing conflicts in the Middle East and Europe, as well as broader global economic instability. 

The reintroduction of the fund is intended to sustain export growth, keep production activities running, and boost foreign currency inflows. 

Officials said the central bank had first introduced a Tk 5,000 crore refinancing scheme for pre-shipment credit in April 2020 during the COVID-19 pandemic. The fund, initially set for five years, expired in April last year and was not extended at the time. 

According to a circular issued on April 9, all scheduled banks are eligible to access the refinancing scheme, which will remain in force until December 2030. A single organisation can avail loans of up to Tk 200 crore, including interest, at any given time. 

The circular also highlighted that the extension of the refinancing facility has become necessary to help export sectors recover from ongoing global challenges, particularly in the apparel industry, and to maintain export growth and foreign exchange earnings. 

President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Mohammad Hatem, told BSS that the absence of the facility over the past year created significant difficulties for exporters. 

“When the pre-shipment credit was discontinued last April, we strongly criticised the move. This fund was crucial for financing production before shipment. Its absence created a major investment gap in the production process,” he said. 

He added that in many cases, exporters relied on such financing to pay workers’ wages when shipments were delayed. 

“Sometimes salaries were due before shipments were completed. In those situations, we used pre-shipment credit to pay workers. Without it, we have faced serious challenges over the past year,” he noted. 

Thanking the government, Hatem said business leaders had earlier discussed the issue with Prime Minister Tarique Rahman ahead of the election, who had assured a business-friendly environment. 

BGMEA President Babu also pointed out that working capital loans against letters of credit previously carried interest rates of 12–13 percent, compared to 5 percent under the special fund, reports BSS.

“Earlier, before COVID, the rate was around 7 percent. Later, under the five-year fund, we could borrow at 5 percent. After it expired in 2024, despite repeated efforts, it was not reinstated until now. The current government has taken prompt action to relaunch it,” he added.