Apparel manufacturers have requested for a five-year timeframe -- which is three years more than it had originally agreed to -- to repay the loans disbursed by the government under the stimulus package to combat the economic fallout from the pandemic.
The extension is being sought at a time when the export earnings are hitting choppy waters.
In March, the government announced a stimulus package of Tk5,000 crore for export-oriented industries to pay workers’ wages to tackle the impact of the Covid-19. Exporters were offered the package as a loan at 2% interest.
Later, additional funds were requested as the exporters cited the initial stimulus insufficient.
From the stimulus package, the apparel manufacturers have taken Tk10,500 crore so far to pay the workers’ wages.
As per the terms of conditions of the package, manufacturers were asked to repay the fund in 18 equal instalments over two years with a grace period of six months.
In a letter to the commerce ministry on October 22, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), citing the ongoing situation as critical for the sector, sought to repay the funds through 60 instalments instead of 18 with a grace period of one year.
The letter stated that the exporters were still facing a financial crisis as their buyers were delaying shipments and payments due to the pandemic.
Hence, it would be quite impossible to repay the loan within the stipulated time, it said.
In response to the demand from the BGMEA, the commerce ministry requested the finance ministry to extend the timeframe for repayment of the fund.
“There is a lockdown in export destinations in wake of the second wave of the Covid-19 pandemic. Shops are closed and the retailers fear a significant drop in sales. So, they will go slow on new work orders,” Faisal Samad, senior vice-president of the BGMEA, told Dhaka Tribune.
The brands and retailers are calling for deferral of shipment as well as payments.
“In this context, we are going through a tough time.”
To overcome the situation and retain employment, the sector needs government support, especially financial support.
“While we are fighting to remain afloat, the pressure of repaying loans will create a fund crunch. That is why we sought an extension for the repayment of loans,” Samad added.