Bangladesh secures $500M World Bank guarantee to revive export fund
WB–linked deal to revive credit for exporters marks key step toward restoring Bangladesh’s economic stability
DHAKA, Bangladesh (MNTV) — Bangladesh has received a $500 million lifeline from the Multilateral Investment Guarantee Agency (MIGA), a World Bank Group arm, to relaunch its suspended Export Development Fund (EDF) — a key credit facility for exporters in the garment, textile, and manufacturing industries.
The announcement, made by Finance Secretary Md Khairuzzaman Mozumder during the IMF–World Bank Annual Meetings in Washington DC, signals a major shift in how the South Asian nation finances its export-driven growth.
For years, the EDF drew directly from Bangladesh Bank’s foreign reserves to provide low-interest foreign currency loans for importing cotton, yarn, and other raw materials. That approach collapsed in 2023 when dwindling reserves forced authorities to freeze disbursements.
According to independent outlet Jagonews24.com, the new arrangement replaces reserve financing with a risk-insured structure backed by MIGA. Instead of depleting reserves, the government will now secure guaranteed loans from international lenders.
MIGA’s involvement shields these lenders from non-commercial risks such as currency inconvertibility or political disruption—reducing borrowing costs and restoring exporters’ access to affordable credit.
“This is not aid—it’s a sustainable financing model,” Khairuzzaman said. “By leveraging MIGA guarantees, we can revive the EDF without draining reserves and maintain stability while boosting exports.”
The Finance Division, in coordination with Bangladesh Bank, will manage the fund to ensure that credit disbursements align with macroeconomic targets. Exporters will again be able to access concessional loans to maintain production cycles and meet global delivery deadlines—vital in a just-in-time industry where delays can cost contracts.
While welcomed by industry, the revived fund is only a fraction of its former size. At its peak, the EDF reached $7 billion, serving thousands of exporters across multiple sectors.
“Five hundred million dollars is small compared to demand, but it’s a start,” said Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association. “Even partial restoration will relieve cash flow pressure and help us regain competitiveness.”
For the Bangladesh Garment Manufacturers and Exporters Association, the fund’s return is as much symbolic as it is financial. “The EDF was a safety net that kept factories running during crises,” said Senior Vice President Enamul Haque Bablu. “What matters now is transparent implementation and an expansion roadmap.”
The deal also deepens Bangladesh’s ties with MIGA, which is exploring additional projects, including the next phase of Petrobangla’s LNG infrastructure initiative. For MIGA, supporting export resilience in developing economies aligns with its mission to attract private capital and reduce poverty through sustainable growth.
Analysts say the EDF revival represents more than liquidity relief — it reflects a rethinking of Bangladesh’s external financing model. By combining global risk guarantees with domestic oversight, the government is attempting to protect reserves while sustaining its $55 billion export economy.
If executed effectively, the new structure could serve as a template for other emerging economies facing reserve stress. For millions of Bangladeshi workers in ready-made garments and manufacturing, it offers a much-needed signal that the country’s export engine is back on track.
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