In the first two months of FY25, both import-related letter of credit (LC) openings and settlements fell by approximately 13% due to political instability and stagnant investment. Data shows $10.03 billion in import LCs were opened in July-August, down nearly $1.5 billion from the previous year. The decrease is attributed to unrest from anti-discrimination protests, a five-day internet blackout, and disruptions in transport and banking.
The decline in LC openings, particularly in capital machinery (down 44%) and petroleum (down 36%), signals reduced investment and industrial activity. LC settlements also dropped to $10.34 billion from $11.90 billion last year. While private banks are managing deferred payments better, state-owned banks face pressure from overdue payments, partly due to a dollar shortage. The trend indicates potential negative impacts on both imports and exports if it continues.
Source for more details:
