Bangladesh Launches 8% Offshore Dollar Loans

In a strategic move to strengthen exporters’ financial capacity, the Bangladesh Bank is set to introduce offshore dollar loans at a competitive interest rate of 8%, significantly below the prevailing 14–16% charged on local currency loans. Officials indicate that a formal circular outlining the scheme’s operational framework will be issued shortly.

The facility is designed to provide exporters with working capital for day-to-day business operations, including wages, utility payments, and other essential expenses. Loans will be repaid from export proceeds in foreign currency, relieving pressure on domestic banks and supporting the country’s foreign exchange reserves.

Additionally, exporters will have the flexibility to convert borrowed dollars into taka through currency swaps with their banks, without incurring extra interest costs. Loan amounts will be directly linked to confirmed export orders. For instance, an exporter securing an order worth $100 and using $60 via a letter of credit for raw material imports may borrow the remaining $40 to cover operational expenses under the offshore facility.

Banks will extend loans based on their established relationships with clients, with maturities ranging from three months to one year. No rigid lending caps have been imposed, giving banks discretion to tailor loans to client requirements.

The move comes following a reduction in the Export Development Fund from $7 billion to $2.2 billion under the IMF programme, which has restricted low-cost foreign currency financing for exporters.

Industry experts have welcomed the initiative. Mahmud Hassan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association, termed it a positive step but recommended lowering the interest rate to 6–7% to remain competitive with other funding options. Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, emphasised that the success of the facility depends on exporters executing orders on time and repatriating foreign earnings.

Fahmida Khatun, executive director of the Centre for Policy Dialogue, urged careful vetting to prevent misuse, while Zahid Hussain, former lead economist at the World Bank’s Dhaka office, highlighted that borrowers must shoulder any exchange rate risks arising from taka depreciation.

Overall, the offshore dollar loan facility is expected to enhance exporters’ liquidity, reduce financing costs, and strengthen Bangladesh’s global trade competitiveness while safeguarding the country’s foreign exchange reserves.