This is not a gpg problem :-) Your script tries to run the gpg binary twice. The first call tries to decode the file:
gpg --output "$outputF" --decrypt "$encryptedF"
Since no means of passphrase input is given, gpg tries to read the passphrase from the console. What now happens, depends on your gpg configuration, ksh behaviour, etc., but I suspect interaction with STDIN is somehow crippled, resulting in the EOF error.
The solution of your problem: You have to add the passphrase source to the decryption call:
echo "PASSPHRASE" | gpg --passphrase-fd 0 --output "$outputF" --decrypt "$encryptedF"