Bangladesh’s import settlements dropped by nearly 11% in August despite an improved dollar supply, mainly due to reduced imports of capital machinery, reflecting weak business sentiment and sluggish new investment.
According to Bangladesh Bank data, Letters of Credit (LC) settlements stood at US $ 4.88 billion in August 2025, down from US $ 5.48 billion in the same month last year. By contrast, LC openings rose slightly by 3.06% year-on-year to US $ 5.38 billion.
Bankers and economists said the fall in settlements stems from lower LC openings in previous months and limited demand for capital goods, as most traders are now focusing on consumer imports rather than raw materials or machinery.
“Entrepreneurs are holding back on new investments, and deferred LCs are no longer being rolled over,” a deputy managing director of a private bank told.
Md Mazadul Hoque, executive director of the Policy Think & Economic Research Centre, noted that with high lending rates and slowing private sector credit growth, businesses are opening LCs mainly for consumer goods. “Private sector lending is weak, new investments are missing, and naturally, imports of capital goods are declining,” he said.
Professor Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), observed that while the apparel sector continues to sustain import demand, capital machinery imports fell sharply, in line with muted credit growth of 6–7%.
Central bank figures show capital machinery imports dropped by 11.5% during July–August.
Tarek Reaz Khan, managing director of NRB Bank, said the slowdown in settlements reflects the steep decline in LC openings seen at the end of 2024 and early 2025.
Bangladesh’s dollar market turmoil in 2022 had forced the central bank to impose cash margins on LCs, leading to widespread overdue payments. These restrictions were eased in 2024, restoring some import momentum.
However, experts caution that the current slowdown in investment could worsen unemployment and fuel broader economic and political risks.
A senior Bangladesh Bank official said adequate dollar reserves now exist to meet LC demand, but restoring investor confidence will hinge on political stability.
