The Bangladesh Bank has announced a loan repayment extension of up to eight years for businesses in import-dependent industries that have faced losses due to the depreciation of the taka against the US dollar.

The repayment relief applies specifically to importers who brought goods under delayed payment arrangements and incurred losses because of the depreciation of the local currency. Under the new terms, these loans can be repaid monthly or quarterly, with a one-year grace period. Losses will be calculated separately for each case to ensure fair treatment.

The central bank attributed the taka’s depreciation to the lingering effects of the COVID-19 pandemic, the Russia-Ukraine war, and the global economic slowdown. These factors have severely impacted local manufacturing industries dependent on imported raw materials, resulting in exchange rate losses.

In its statement, the central bank highlighted the emergence of forced loans and working capital deficits, which have undermined the production capacity of affected industries. The directive seeks to alleviate these pressures by allowing businesses more time to manage their financial obligations.

The repayment extension is designed to preserve the production capacity of critical sectors, including steel, cement, and other import-dependent industries. Local industries whose product prices are regulated by the government, such as food importers dealing with oil and sugar, are also eligible for this relief.

The decision comes as Bangladesh grapples with the challenges of a depreciated currency. The taka’s loss of value against foreign currencies has increased the cost of imports, straining businesses that rely heavily on foreign raw materials. Global economic uncertainty has compounded this, pushing many companies into financial distress.

The extended repayment period provides temporary relief for affected businesses, enabling them to recover from exchange rate losses without immediate financial strain. However, the success of this initiative depends on how effectively businesses can utilize the grace period to stabilize operations and rebuild working capital.

For the economy, the measure is expected to prevent further reductions in production capacity across vital industries, ensuring continuity in supply chains for essential goods. It also underscores the central bank’s broader effort to manage the economic repercussions of external shocks while supporting domestic industries.