- Exporters to get 210 days to repatriate export proceeds
- Imports to continue enjoying 360-day usance for another 6 months
- Bangladeshi blue helmets to get 2.50% incentive for remittances
- Central bank officials say the measures are to stabilise the depleting reserve
The central bank is going to offer exporters 210 days to repatriate proceeds – extended from the existing 120 days, according to officials, aiming at better competitiveness of Bangladeshi products in foreign markets that eventually will help boost the foreign currency reserve.
To ease the pressure on forex reserves, the authorities are also going to offer cash incentives to remittances by Bangladeshi peacekeepers serving UN missions and extend the 360-day usance period for imports for another six months.
The central bank is going to issue three separate circulars in this regard soon, top officials confirmed to The Business Standard. They said the Bangladesh Bank has decided to extend the export proceeds repatriation time upon the request of the Bangladesh Knitwear Manufacturers and Exporters Association.
Foreign buyers usually clear the payments for apparel items within 90-120 days. But they are now seeking more time to clear it amid recession fears, according to executive president of the association Mohammad Hatem.
"Export orders have already plummeted by around 30%. If we do not extend the time for payments, the export outlook may get worse further," he commented.
The extended 360-day usance period for the imports of industrial raw materials, agricultural machinery and chemical fertilisers under supplier's or buyer's credit will expire 31 December this year.
In January, the central bank pushed back the usance period to 270 days from 180 days. In July, the period was further extended to 360 days. The Bangladesh Bank has decided to extend the facility for another six months.
Central bank officials say if importers are allowed to pay for the letter of credits (LC) after one year, the pressure on the reserve will be less for the time being.
According to the Bangladesh Bank, the country's foreign exchange reserve stands at $34.3 billion now. If the Export Development Fund, loans to Sri Lanka and other expenses are excluded, the amount hovers around $26.3 billion. The central bank is selling about $1.5 billion from the forex reserve every month to banks to meet the trade deficit.
Central bank officials argue that if the import payments could be delayed and more export orders could be secured by extending the time for export proceeds, it eventually will help stabilise the reserve.
"Extending the usance period for imports has both advantages and disadvantages," a Bangladesh Bank official told The Business Standard. "This could provide a brief relief to the reserve, but we will be in a forex crunch again when clearing the payments in upcoming months."
The official argued that the extended payment time will reduce the country's bargaining capacity to some extent during imports.
However, Mohammad Hatem did not agree with that official as he said, "We will import raw materials from suppliers who agree to receive the payments after 360 days."
Expatriates working in different countries are getting 2.50% cash incentives for money transacted home. They get Tk107 per dollar for remitting through the formal banking channel.
But Bangladeshi nationals at the UN peacekeeping missions do not receive any incentives. Besides, they are also offered a lower rate of the greenback than the blue-collar workers. But the central bank has decided to provide them with the same incentives from now on.