Bangladesh has reported a massive surge in letter of credit (L/C) openings.

According to a Bangladesh Bank (BB) statement, the country's banks opened L/Cs in the second half of 2009 worth 18 per cent more than in the second half of 2008.

L/C appetite

The bank says that L/Cs worth US$13.19 billion were opened between July and December last year compared with US$11.17 billion in the same period in the previous year.

The massive surge in the value of L/Cs in the second period was mainly due to a big leap in food imports according to a BB statement.

Specific increases

Comparing the two periods, the central bank said L/Cs for edible oil were up by no less than 1150 per cent.

Meanwhile the value of L/Cs opened for pulses, sugar and wheat were up by 495 per cent, 260 per cent and 42 per cent respectively.

Non-food increases

Comparing the same periods, the statement said the value of L/Cs for pharmaceutical machinery rose by 146 per cent while L/Cs opened to purchase machinery for the plastics industry were up by 75 per cent.

Analysts see the increase in L/C openings as a positive sign for the economy.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.