Due to several factors, including political unpredictability and sluggish investment, import-related letter of credit (LC) openings and settlements fell by almost 13 per cent in the first two months of FY ’25.
The central bank reports that between July and August, import LCs totaling US $ 10.03 billion were opened, a decrease of about US $ 1.5 billion from the same period in the previous fiscal year.
The largest decrease in LC openings, as determined by a sector-specific analysis, was observed in capital machinery imports, which decreased by 44 per cent over the previous two months. Petroleum imports also saw a dip of 36 per cent.
In July and August, just US $ 286 million worth of LCs were opened. All other industries saw lower imports than the previous fiscal year, except industrial raw materials.
On the issue, Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, told the local media, “As an import-dependent country, we should be importing at least US $ 5-6 billion each month. Given the size of our economy, we need even more imports. The current decline in imports is not a good sign for us.”
Commenting that the decline in capital machinery imports indicates a drop in investment in the country, the banker said, “The decrease in machinery imports shows that industries are not expanding their capacity. Many import-dependent factories are shut down, which likely explains the drop in LC openings.”
“However, we need to closely monitor the trend in import LC openings over the coming months,” he added.
