LC opening for non-food items import becomes more complicated
26 March 2023
Staff Reporter :
Opening of letters of credit (LCs) for import of non-food items has become more complicated as the Bangladesh Bank has tightened dollar sale to the commercial banks temporarily.
The central bank took the step when the overall LCs opening for import of goods declined by 22.5 per cent in the first six months (July to December) period of the current fiscal year compared to the same period of last year, according the BB data.
The LCs worth $34.10 billion were opened in the mention period, which was $44.10 billion in the corresponding period of last year, the data showed.
The biggest drop in LC opening was in import of capital machineries-about a 65 per cent decline -- during the six month period. Followed by intermediate goods fell by as much as 33 per cent, the BB data said.
Amid the situation, the central bank has taken a cautious stance in dollar sale to the commercial banks as pressure builds up on the country's minimal foreign-exchange reserves, particularly for import financing.
A significant growth in the opening of LCs against import of eight most-consumed Ramzan essentials, wherein most of BB-released dollars are spent in recent months, largely prompted the tightening.
Md Mezbaul Hoque, spokesperson of the BB, said the situation with the US dollar keeps improving in recent times as the balance of the greenback in the banks rose to $3.65 billion as on March 22 from $2.50 billion recorded on January 01, 2023.
On the other hand, earnings from export and remittance continued rising, he said, citing, "So, things are improving."
According to official statistics, the BB sold $ 1410.70 million to the banks in October 2022 followed by $ 1395 million, $ 1442.86 million and $ 1221.80 million in November, December and in January 2023 respectively.
The central bank has scaled down the sale of the US currency since February when only $ 924.26
million was sold. The handout figure further declined to $ 640 million up to March 22, 2023.
Industrial production has been disrupted as well as revenue collection from import duty has also been dropped sharply due to the decline in import of capital machineries and intermediate goods.
A stagnated situation is prevailing in the country's trade and commerce as new investment in industrial sector has declined, which has an impact on VAT collection, officials of the National Board of Revenue (NBR) said.
The slow pace in trades will also impact on direct tax collection in days to come, the officials said.
