The opening and settlement of Letters of Credit (LCs) declined dramatically in the last two months of October and November. Opening of LCs against imports, generally known as import orders, decreased by 8.68 per cent to $ 2873.76 million in October from the previous month September. The amount for new LCs opening in September was $ 3147.05 million. In November LC opening also decreased by 0.89 per cent to 2,848.23 million compared to October, according to BB data.
‘The business houses are now reluctant to open fresh LCs due to the ongoing political turmoil in the country’, said joint director of Foreign Exchange and Operation Department of Bangladesh Bank (BB) Md Monjurul Haque said while talking to a national daily The Independent.
“The opening of LCs may fall further in the coming months if the ongoing political turmoil goes on continuously,” said the BB official. On the other hand, LC settlement decreased in the month of October compared to September. In October LC settlement was $ 2,816.86 million while it was $ 3,092.83 million in September. According to BB data, LC settlement decreased by 8.92 per cent.The central bank, however, asked the banks repeatedly to open LCs in a bid to remove stagnancy prevailing in the import sector, he said.
“The country’s import process has been affected by political volatility and it has become a major blow to the business sector”, said the BB official. Under the circumstances, the country will not likely achieve the desired gross domestic product for 2013-14, the BB official also said. In a telephone discussion, FBCCI vice-president Md Helal Uddin told the Independent that the declining trend of LCs opening and settlement will push further on in the coming month if the political crisis continues.
“We are failing to open fresh LCs as well as settlement because most of the shipment vehicles are trapped in the port. The destructive political programmes are hindering the normal movement of people as well as the smooth supply of goods. It would be very difficult for the businesses to recover the losses incurred by the national economy due to the frequent hartals and blockades,” Helal said and added that it is urgent to give up these programmes hindering the national development. He once again called all political parties to avoid such destructive activities which are hindering the country’s economy.