Bangladesh witnessed a slight increase in the opening of letters of credit (LCs) for imports in the fiscal year 2023-24, totaling $68.19 billion, a 1.85 percent rise from the $66.95 billion recorded in the previous fiscal year, according to data from Bangladesh Bank (BB).

This modest increase comes after a significant drop from $90.43 billion in LC openings in the fiscal year 2021-22.

In the fiscal year 2023-24, the settlement of LCs amounted to $66.0 billion, compared to $72.91 billion in the fiscal year 2022-23. This settlement reduction reflects the central bank’s stringent measures to curb imports amid a persistent dollar shortage that has plagued the market since mid-2022.

To address dollar scarcity, BB implemented several measures, including maintaining a 100 percent LC margin for opening import LCs and discouraging the import of luxury goods. These actions have decreased overall imports.

Additionally, the central bank has actively sold dollars from its reserves to stabilize the foreign exchange market.

While these restrictions have helped manage the dollar shortage, they have also negatively impacted imports of capital equipment and raw materials, essential components for industrial operations. The decline in these imports has subsequently affected industrial production and economic activity.