Traders struggle to open LCs for import of essentials

Al Amin :
The country is on path to face a catastrophic supply chain crunch during the upcoming Ramzan as most of the scheduled banks are still refusing to open letter of credits (LCs) due to a shortage of foreign currencies.
The Bangladesh Bank has not yet given any solution, despite the repeated calls by the Commerce Ministry and the trade bodies for supplying the foreign currencies from forex reserves before the holy month.
Around $2.5 billion will be needed to import seven essential commodities including oil, sugar, chickpeas and dates to meet the demand in this year’s Ramzan, according to the Commerce Ministry.
Resolving the crisis, a delegation led by the FBCCI president recently met the central bank governor and demanded the availability of dollars from foreign exchange reserves before the Ramzan. The Commerce Ministry has also sent a letter to the governor with same request.
City Group, one of the country’s leading consumer goods suppliers, tried to import seven types of products, including sugar, chickpeas and oil, but failed to open an LC worth $38.52 crore. The company approached to 28 banks of the country but could not open LCs due to the dollar crisis.
Biswajit Shaha, Director of City Group, told The New Nation, “We are not able to open the necessary LCs due to the dollar crisis. We have written a letter to the Commerce Ministry of stating their problems, but did not get any solution yet.”
As per the latest data of the central bank, opening of LC reduced by 26.5 per cent and LC settlement by 1.56 per cent in first six months (July-December) of the current fiscal year.
Businesses opened LCs worth $32.39 billion during the six months period. Of the amount, LCs opened worth $6.39 in July, $6.62 billion in August, $6.51 billion in September, $4.74 billion in October, $4.02 billion in November and $4.11 billion in December.
On the other, LCs settlement reduced to $37.78 billion from $38.38 billion that was in the corresponding period of last year, the central data showed.
However, the country’s foreign exchange reserves slipped to $ 32 billion

after import payments settled bi-monthly with Asian Clearing Union (ACU) on Thursday.
Economists said the erosion of foreign exchange has not reduced due to the previous import payment pressure, although the opening of new LCs has come down.
Meanwhile, the central bank Governor Abdur Rauf Talukder on Tuesday instructed the managing directors of the four state-owned commercial banks (Sonali, Janata, Agrani and Rupali) to open LCs as per the demand of the traders for importing essential goods for the upcoming Ramzan.
The supply of dollars has been reducing in the country’s foreign exchange market for several months due to increased demand in post-Covid-19 period and the impact of the Russia-Ukraine war.
As a result, the banks were discouraging the import of non-essential goods. But now, there is a shortage of dollars in import of consumer goods for the upcoming Ramzan.
Various levels including Finance Ministry and Commerce Ministry requested the central bank to solve the problem, but it yet to be resolved.
Brigadier General (Retd) Sarwar Jahan Talukder, Director of the Deshbandhu Group, said that they have sent letters to Bangladesh Bank and Commerce Ministry requesting dollars supply for import of raw sugar.
“But we are still failing to open LCs for it, despite the central bank have issued circular allowing the import of seven essential commodities ahead of the Ramzan,” he said.