The value of import letters of credit (L/Cs) opened in Bangladesh in January 2008 was double the value of similar credits opened in January 2007.

The figures confirm a sharp upward trend of opening fresh L/Cs witnessed over recent months as importers work to keep pace with growing demand in the wake of natural disasters for commodities including food grains and gasoline products.

Central bank figures

Import L/Cs worth US$2.241 billion were opened during January 2008 as against US$1.163 billion of similar credits in the same period last year, according to figures released by Bangladesh Bank, the country's central bank.

The value of import L/Cs over the whole year to January 2008 has also doubled, according to the bank. The central bank says the value of import L/Cs reached US$1.2 billion this year compared to US$509 million in the previous year.

Natural disasters

The increases in imports of essential items are mainly due to recent floods in the country and the devastating cyclone Sidr, which hit the country in November 2007.

Increases in L/Cs have been reported in respect of various imported goods including rice, wheat, sugar, milk food, edible oils, pulses and onion, all of which rose in terms of both value and quantity according to the central bank.

L/C encouragement

Bangladesh Bank last year ordered commercial banks to encourage businesses, particularly small- and medium-sized ones, to open L/Cs for imports to ensure sufficient supply of commodities in the markets.

The central bank also asked commercial banks to be flexible in terms of opening fresh L/Cs for essential imports.

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