Suppliers to face crisis in Ramzan as banks refusing to open LCs for import of essentials

The country is on a path to facing a catastrophic supply chain crunch during the upcoming Ramzan as most of the scheduled banks are still refusing to open letters of credit (LCs) due to a shortage of foreign currencies. The Bangladesh Bank has not yet given any solution, despite repeated calls by the Commerce Ministry and the trade bodies for supplying 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 holy month. 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 the 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 $0.38 million. The company approached 28 banks in the country but could not open LCs due to the dollar crisis. As per the latest data from the central bank, the opening of LC was reduced by 26.5 per cent and LC settlement by 1.56 per cent in the 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 hand, LCs settlement reduced to $37.78 billion from $38.38 billion that was in the corresponding period of last year, the central data showed.
The supply of dollars has been reducing in the country’s foreign exchange market for several months due to increased demand for mega-projects, fund embezzlement, capital flights, and unceasing corruption. The government and the central bank virtually failed to solve the dollar crisis hovering for the last few months and becoming acute.