Amidst a fall in the letters of credit (LCs) for key essential commodities, the commerce ministry yesterday said it would request banks to retain some dollars to facilitate the import to meet Ramadan's usual increase in demand. 

Commerce Minister Tipu Munshi shared the decision at a press conference in the ministry after a meeting with businesspeople regarding stocks and supplies of seven basic commodities – soybean and palm oil, sugar, lentil, onion, chickpeas and dates.

The announcement came after importers at the meeting said they had not been able to open all the LCs they had wanted to import key commodities amidst a reluctance of banks for a dollar shortage.

A commerce ministry paper presented at the meeting showed that opening of the LCs for import of raw sugar, chickpeas, dates, soybeans and soybean oil declined in the October-December period of 2022 from that in the same period a year ago.

Consumption of these commodities increase during Ramadan, expected to begin from the third week of March this year, and the fall in the opening of LCs could affect supplies for the coming month of fasting, said participants.

At the meeting, commodity processors and importers urged the government to allow them to open LCs even if it meant releasing a portion of funds from the foreign exchange reserve at the central bank.

They also demanded a reduction in the exchange rate of the dollar for settling the import bills to cut costs as some have to pay as high as Tk 111 for a dollar.

The commerce ministry paper showed that opening of LCs for the import of raw sugar slumped 28 per cent year-on-year to 3.75 lakh tonnes in the last quarter of 2022.

In case of chickpea, it dropped 47 per cent to 75,319 tonnes and dates 30 per cent to 21,980 tonnes.

Officials of the commerce ministry however said businesses would start opening more LCs this month to meet the increase in demand.

"We have informed that we are facing problems in opening LCs and urged the authorities to take measures so that banks help us," said Biswajit Saha, director, corporate and regulatory affairs at City Group.

Mohammad Dabirul Islam Didar, head of finance and accounts at Bangladesh Edible Oil, said they urged the authorities to provide dollars to commercial banks from the foreign exchange reserve to help open LCs.