All Overdue International Trade Payments Will Be Cleared Within One Month, BB Governor Says

DHAKA, December 18, 2024 (BSS) – All outstanding payments relating to letters of credit (LC) will be cleared within a month, said Bangladesh Bank (BB) Governor Dr Ahsan H Mansur .

“We told the banks that since you opened it, you will have to pay it. Banks can blame their customers, but as regulators, they have opened the debate and must resolve the problem. We want to reduce it to zero and we hope to be able to do it in a month,” he said.

The BB governor told BSS recently during an interview at its central bank office.

Dr Mansur said Bangladesh has made significant progress on the financial, social and political fronts of trade.

“Trade has been hit in two major ways: financially and through social and political unrest. Let me tell you, we have made significant progress on both fronts. We had accumulated arrears amounting to $2.5 billion. We have now managed to bring it down to over $300 million (as on December 11),” he said.

In order to evaluate this $300 million, he said, the central bank is talking with all the banks to determine who are the people responsible for opening these letters of credit.

“In many cases, these were opened by the S. Alam Group, the Beximco Group or others, who are politically exposed persons,” he added.

But, according to Dr Mansur, the good news is that “our current account deficit has improved thanks to strong growth in remittances. . . the country has seen a more than 26 percent increase in remittances over the past five months.

“Despite the unrest, our exports currently exceed 15 percent. This allows us to reduce backlogs. This will help us resolve other issues with international creditor banks, which have
we have counter-guaranteed our exports and imports,” he added.

He said: “We are facing serious problems while opening letters of credit. Many banks have refused us while many have reduced the exposure limit. So we are negotiating to bring it back to the old limit. But the fact is that the volume of imports has increased, the opening of LCs has increased compared to the same period last year.