The country’s manufacturers are facing an acute raw materials crisis as they are still failing to open letters of credit (LCs) for the import of primary goods due to foreign currency shortage. The businesses have to wait for months to open LCs in the banks to import raw materials amid the dollar crisis and it has created a terrible scarcity of raw materials in the market.
Bangladesh Bank said that the dollar crisis has reduced slightly due to higher remittance inflow and export earnings compared to the import expenditure, although it is yet to reach normal time. The number of LC openings has increased as the dollar supply improved somewhat. On average, the banks are opening LCs around 1,800 to 2,000 per day, which was below 1000 a month ago. The central bank is encouraged to open LCs mostly for the import of essential commodities. But the entrepreneurs said that they are facing a shortage of raw materials in the industrial sector as they are still not able to open LCs due to dollar shortage. The country’s foreign currency reserves have already dropped to $31.15 billion on Thursday and the value of the taka has fallen by 27 per cent from 84 to the dollar to 107. To protect the declining reserves, the government-imposed restrictions on imports of all non-essential goods and reduced the supply of dollars to commercial banks.
The raw material prices soared in the global market soon after the commencement of the Russia-Ukraine war. It invited an acute dollar crisis in the country and prompted the central bank to impose import restrictions in phases to keep the situation under control. The country has a severe shortage of greenbacks due to its dwindling foreign reserves and a sharp drop in the value of the Taka against the dollar.
Mere words will not solve any problem. The government will have to act and show the results.
