Import settlement rises 24% in September

The settlements of import letter of credit (LC) in September increased by 24% compared to the same period last year, driven by overdue payments, despite a decline in the first two months of the current fiscal year due to political unrest.

According to central bank data, payments for import LCs in September reached $5.87 billion, which is around $1.15 billion higher than the same period last fiscal year, when $4.72 billion in LCs were settled.

"In July, import payments were unable to be processed due to an internet shutdown and interruptions in normal banking operations. Additionally, traders faced difficulties making payments in August due to instability that lasted for several days," said Mohammad Ali, managing director and CEO of Pubali Bank.

"As a result, some overdue payments from these two months were made in September, which is the main reason for the increase in settlements," he told TBS.

According to central bank data, import LC payments from July to September of FY25 totaled $16.21 billion, compared to $16.61 billion settled during the same period last fiscal year.

Analysing sector-wise import LC payments, the data reveals that the largest decline in LC payments during the first three months of FY25 was 25% for capital machinery imports compared to the same period last fiscal year, while consumer goods imports fell by 17.6%.

Additionally, LC payments for all types of products, including petroleum and intermediate goods, decreased. However, payments for industrial raw materials increased by 8.3%.

Noting that the pressure from overdue government import payments has decreased, the deputy managing director of a private bank told TBS that since central bank governor Ahsan H Mansur took charge in mid-August, efforts have been made to address around $2 billion in overdue government LC payments.

This figure has now fallen to under $1 billion, he added, stating that once these payments are made over the next few months, the pressure on the dollar will ease further.

According to central bank data, the opening of LCs in September of FY25 decreased slightly compared to the same period last financial year. In September FY25, import LCs opened totaled $5.57 billion, down from $5.20 billion in September of the previous fiscal year.

A senior central bank official said that as an import-dependent country, Bangladesh should aim for monthly imports of at least $5-$6 billion. Given the size of the economy, the country requires more imports; therefore, an increase in the opening of import LCs in the coming days would be beneficial for the economy.

However, several officials at the policy-making level in both government and private banks noted that there has not been significant pressure to open import LCs in October, as the political situation in the country remains unstable. Consequently, imports have not increased significantly, as businesses are hesitant to pursue new investments.

According to central bank data, the opening of import LCs from July to September of FY25 totaled $15.59 billion, compared to $16.72 billion during the same period last fiscal year.

Several banks reported that most are offering a rate of Tk120-Tk121 for dollar purchases of remittances, while the import payment rate ranges from Tk121 to Tk121.50.