New letters of credit or LCs, which were above $8 billion in July last year, came down to $3 billion by December due to the sanctions. The number of LC settlements has also declined significantly.
As a result, there was a slight decline in imports which also widened the trade deficit. It stood at $4.5 billion in the first two months of the current fiscal, while the deficit stood at $7.54 billion in September, $9.59 billion in October and widened to $11.79 billion in November.
Remittances played a key role in narrowing the trade deficit as $10.49 billion was injected into the economy by non-resident Bangladeshis in the first five months of the current fiscal, up 2.48 percent over the same period last fiscal.
MD Majbol Haque, spokesperson and executive director of Bangladesh Bank, said the LC settlement amount by the end of December was a little over $5 billion, up from $7.5 billion in July.
He said that though the mechanisms put in place have helped in reducing the volume of new LC settlements to a significant level, there has hardly been any progress in settling large old settlements.