Stagnation in the country’s import trade has begun to ease with positive growth in Letter of Credit (LC) openings.
During the first two months (July and August) of the current FY27, the rate of LC openings increased by nearly 18% compared to the same period of the previous year, according to a recent Bangladesh Bank report.
Additionally, LC settlements witnessed growth of over 10%, signaling an overall economic recovery.
In particular, LC openings for consumer goods experienced significant growth, alongside an increase in capital machinery LC openings.
According to the report, a total of $13.94 billion in LCs was opened in the country during the July–August period of the current fiscal year.
In the same period of the previous fiscal year, this amount was $11.82 billion.
In other words, over the span of a year, LC openings increased by $2.1108 billion, or 17.92%.
On the other hand, LC settlements during the first two months of the current fiscal year stood at $12.466 billion, compared to $11.257 billion settled during the corresponding period of the previous fiscal.
Consequently, LC settlements grew by $1.209 billion, or 10.74%, year-on-year.
Analysts note that during the previous administration, various import controls had been imposed to ease pressure on foreign exchange reserves.
Subsequently, as expatriate remittances increased and the dollar crisis eased somewhat, importers' capacity to open and settle LCs grew, positively impacting overall import activities.
The highest growth in import trends was observed in consumer goods LC openings.
According to Bangladesh Bank data, LCs worth $1.259 billion were opened in this sector during the first two months of the current fiscal, up from $1.003 billion in the same period of the previous fiscal.
This represents a year-on-year increase of $256 million, or 25.50%, in consumer goods LC openings.
Meanwhile, the growth rate of settlements for consumer goods was lower compared to openings.
During the July–August period, consumer goods LCs worth $1.017 billion were settled, compared to $923 million in the previous fiscal year—representing a settlement increase of $94 million, or 10.10%.
Growth in LC openings for industrial raw material imports was very minimal.
During the first two months of the fiscal, LCs worth $4.216 billion were opened in this sector, a slight increase from $4.207 billion in the corresponding period of the previous year.
This translates to an increase of $9 million, or 0.21%, in industrial raw material LC openings.
However, settlements in this sector declined.
During the July–August period, industrial raw material LC settlements totaled $3.802 billion, down from $3.887 billion in the same period last year.
This marked a year-on-year decrease of $85 million, or approximately 2.19%.
LC openings for capital machinery imports, which are closely linked to industrialization and production activities, also experienced growth.
During the first two months of the fiscal, LCs worth $357 million were opened in this sector, compared to $317 million in the same period of the previous year.
This represents a year-on-year increase of $40 million, or 12.87%, in capital machinery LC openings.
Conversely, the picture for capital machinery settlements was different. During the July–August period, capital machinery settlements amounted to $291 million, down from $308 million in the corresponding period of the previous year.
As a result, capital machinery LC settlements decreased by $17 million, or 5.52%.