Import payments drop 39% in March
Bankers said the pressure has recently subsided due to low new LC openings and increased dollar liquidity in the bank channel
Import restrictions imposed by the central bank resulted in a 39% drop in import payments in March and a 45% decrease in LC (letter of credit) opening compared to the same period a year ago.
Officials from several banks familiar with the situation have reported pressure on deferred LC payments opened six months to a year ago for the past few months.
However, bankers said the pressure has recently subsided due to low new LC openings and increased dollar liquidity in the bank channel.
According to Bangladesh Bank data, LC settlements in March of the current fiscal year totalled $4.85 billion, a 38.92% decline from $7.94 billion in the same month the previous year.
Keep updated, follow The Business Standard's Google news channel
Besides, LC settlement in the July-March period of the current fiscal year was $57.05 billion, which was $60.61 billion in the corresponding period last year – a 5.87% drop in nine months.
The central bank data show that import bills for most items, including daily essentials and capital machinery have decreased.
However, the import cost of petroleum increased by 31% due to higher prices in the international market.
Meanwhile, LC openings contracted by $4.3 billion (45.21%) to $5.21 billion in March's previous fiscal's $9.51 billion.
"Due to the shutdown of most of our industries during the pandemic, the import of capital machinery had decreased significantly," Mosleh Uddin Ahmed, managing director & CEO of Shahjalal Islami Bank told The Business Standard.
"However, when the situation normalised, the months before and after March, many LCs were opened for the import of capital machinery, showing a sudden jump," Mosleh Uddin Ahmed said.
He observed that the decrease in LC opening will relieve the dollar situation of the banks in the current situation, but the economy may suffer if imports remain low for a long time.
According to the central bank, the opening of import LCs will decrease further in April and May this year.
The central bank says the opening of import LCs and probable liabilities against back-to-back LCs are projected at $14.21 billion and $2.41 billion, respectively, for the period of March-May of FY23.
Of this, LCs worth $4.74 billion are likely to be opened in April and $4.67 billion in May. However, in March, import LC opening exceeded the central bank's estimate by about $500 million.
