LC opening in Bangladesh down by 26% YoY in FY23

01 Aug '23

1 min read

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Bangladesh's private and public entities opened letters of credit (LCs) worth $69.36 billion in fiscal 2022-23—down by 26 per cent year on year, implying a sharp drop in imports.
The central bank said overall import cost fell due to its proper price monitoring.
Domestic firms opened 18 per cent lower LCs—worth $7.14 billion—between July 2022 and May 2023.

Bangladesh's imports sharply dropped in the last fiscal as the slide in the opening of letters of credit (LCs) driven by a shortage of US dollars and restrictions on the purchase of non-essential items from abroad indicate.

Private and public entities opened LCs worth $69.36 billion in fiscal 2022-23—down by 26 per cent year on year (YoY), according to data from the Bangladesh Bank, which said overall import cost declined because of its proper monitoring of prices.

The central bank started tightening measures to discourage imports, which were higher than exports and remittances due to rising pressure on the country's foreign exchange reserves and volatility in the exchange market.

Domestic banks were asked to take up to cent per cent of import payments in advances from businesses and the central bank started monitoring imports amounting to $3 million and above before allowing businesses to open LCs. This was done to stop depletion of the reserves.

Still, the country's reserves fell by 25 per cent YoY to $29 billion on July 26.

Domestic businesses opened 18 per cent lower LCs worth $7.14 billion in the July 2022-May 2023 period.

ALCHEMPro News Desk (DS)

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