To ensure the country's food security, opening letters of credit (LCs) for importing essentials such as rice, wheat and sugar has increased in September compared to the previous month.
Imports of products like capital machinery and machinery used in various industries and scrap vessels have also increased in that month.
Economists said opening LCs for importing food when many countries are worried about food shortage is a positive thing. They, however, urged the authorities to be careful so that money cannot be laundered through these LCs.
According to central bank data, LCs involving $1.73 billion were opened in August to import rice, wheat, sugar, coal, scrap vessels, raw cotton, fertilisers, fuel oil, capital machinery, machinery used in industries and for back-to-back LCs.
In September, LCs involving $3.15 billion were opened for these sectors, around $1.42 billion higher compared to the previous month. Except for the scrap vessels and fuel oil, the LC settlements for the rest of the products also increased as compared to the previous month.
LCs involving $43 million for rice import were opened in August, which increased by 585% to $295 million in September.
Meanwhile, LCs worth $175 million were opened in August for importing wheat, which increased to $358 million in September.
LCs for sugar rose to $61 million in September from $6 million in August. The price of sugar in the country has increased for the last month. Therefore, economists say the increase in sugar import LC opening is helpful for the market.
LCs for fuel oil increased by around $150 million in September compared to August. LC openings for this commodity stood at $395 million in September, up from $243 million the previous month.
Also, the government wants to increase the import of coal. While LCs involving $21 million and $36 million were opened in July and August respectively, LCs involving $155 million were opened in September. The stakeholders said the government has opened these LCs for the fuel of Payra Coal-Based Power Plant.
In order to ensure that there is no shortage of fertilisers during the cultivation season, the opening of LCs for the import of fertilisers has increased at a significant rate compared to the previous month. While LCs involving $87 million were opened in August for fertilisers, it grew by 354% to $395 million in September.
Professor Mustafizur Rahman, distinguished fellow of the Center for Policy Dialogue (CPD), said the government has increased the import of rice and wheat in order to strengthen food security.
"The process of increasing the import of rice and wheat is being done through the private sector. At present, the stock of rice in the country is low. So, the government wants to increase the stock of rice and wheat more than before. For this reason, the government has decided to increase the import of rice. The government will buy rice by importing it through the private sector," Prof Mustafizur Rahman told TBS.
"Besides, one crore low income people will be given rice at Tk15 per kg. The government has to import rice in large quantities for this programme and to maintain the stock."
He further said a crisis has been brewing due to the Ukraine-Russia war. The essentials are being imported in large quantities as a precautionary measure to ensure food security.
Pointing out the need to ensure energy security, he said, "The increase in opening LCs for importing coal and fuel oil indicates that the government is working to ensure energy security. I think it is a positive thing."
Saying that the LCs for capital machinery will help increasing the country's production, the economist said, "We should also aim to ensure that money is not laundered through overinvoicing or underinvoicing."
Sources at the central bank said it has been supplying dollars from the foreign currency reserves to the state-owned banks for LC settlement of essential commodities, fertilisers, fuel and government imports.
On Tuesday, $35 million was sold from the reserve. The central bank has sold $5.60 billion so far in the current fiscal year. Reserves stood at $34.09 billion yesterday.