The value of import letters of credit (L/Cs) in Bangladesh declined by about US$100 million in January 2007 compared with the same month last year.

Import L/Cs valued at US$1119.85 million were opened last month against US$1218.54 million in the corresponding month of the last year.

Inflationary pressure

Imports down on last year include rice, wheat, sugar, edible oil, pulses, onion and chemical fertiliser. Some reports suggest that shortages of these items could force prices upwards.

Local media reports say bankers reckon the trend of lower imports has continued into February.

False declarations

The fall in L/C openings may be linked to the suspicions of officials who think significant amounts of goods declared on import L/Cs are not actually being brought into the country.

Consequently, Bangladesh Bank has been ordered by the interim government to collect data on the amount of imports of essential goods against L/Cs opened, the revenues earned by the government and people involved in foreign currency smuggling (DC World News, 6 February 2007).

Bank intervention

Bangladesh Bank meanwhile has submitted a report relating to essential commodity imports.

It has also asked commercial banks to speed up L/C settlement against imports to ensure the smooth supply of essential commodities.

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