Al Amin :
Businesses are still struggling hard to open letters of credit (LCs) due to ongoing dollar crisis and restriction opening LCs.
Following this, many entrepreneurs are winding down or curtailing their business to minimize loss for the year-long greenback shortage, businesses said.
The slow in imports will hurt the country’s economic activities as it will prompt to lose growth momentum, economists said.
Mohammad Hatem, Executive President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told The New Nation, “LC opening complication still on. Banks are now allowing us opening LC for delaying back-to-back LC payment or if there is any overdue payment.”
But, deferral back-to-back LC payment or overdue payment is normal in international trades as the buyers, some cases, don’t pay timely, he added.
Following the LC complication, many entrepreneurs are curtailing or changing their business to minimize losses, he added.
According to the Bangladesh Bank data, imports fell by 38 per cent due to the dollar crisis in February. Bangladesh imported goods and services worth $8.32 billion in February last year, which has come down to $5.14 billion this February.
The LC was opened worth $45.51 billion in July-February period of the current fiscal year, which is 23.45 per cent less than the same period of the last fiscal year, the data showed.
In the same period of the last fiscal year, the LC was opened worth $59.45 billion.
Although the opening of LC has decreased, the LC settlement has not declined that much. During the period of July-February of the current fiscal year, the LC settlement was $52.09 billion, which is 1.22 per cent less than the same period of the last fiscal year.
During the same period of the last fiscal year, the LC settlement was $52.66 billion, according to the BB data.
Bangladesh Bank officials, however, said import cost has reduced due to the close monitoring by them, which has helped to prevent over-invoicing.
The goods were imported at the cost of $8.5 billion, now it is being brought at a cost of $5.5 billion, they said.
Now no one is able to bring products at higher prices due to checking the price of imported products and the prices of export products will also be checked, they added.
Dr Zahid Hussain, former lead economist of the World Bank Dhaka Office, said, “Bangladesh cannot save reserves by restricting imports, instead, slow imports will hurt the economic activities as investors could not import required raw materials for investment.”
“If the economic activities lose momentum, then it will put further pressure on the reserves,” he added.
Meanwhile, Bangladesh Bank continues to sell dollars from reserves. As a result, the reserve has decreased to $31.24 billion.