The opening of letters of credit (LC) for imports in Bangladesh has experienced a significant decline of 26.80% during the July-April period of the financial year 2022-23, according to a report by the Bangladesh Bank. The central bank’s strengthened monitoring measures and increased scrutiny on LC opening have led to a drop in LCs, amounting to $20.64 billion compared to the same period in FY22.
The decline in imports is attributed to multiple factors, including the central bank’s requirement for advance notifications on LCs exceeding $3 million, enhanced import monitoring to prevent misuse and money laundering, and the ongoing shortage of dollars. Additionally, some banks facing the dollar crisis were unable to meet their LC payment obligations, further contributing to the decrease in new LC opening.
Notably, LC opening for various imports, such as capital machinery, intermediate goods, consumer goods, and industrial raw materials, has shown significant declines in the July-April period of FY23. The country’s forex reserve has also seen a decrease, reaching $30.17 billion as of May 17.
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