The Ministry of Food and Disaster Management has sought the central bank's intervention to ease opening of letters of credit (L/Cs) in banks for wheat imports, officials said.

"We seek your personal intervention so that SCBs (state-owned commercial banks) and PCBs (private commercial banks) give priorities in opening L/Cs and settlement of L/C-related matters for wheat imports," the food secretary wrote to the Bangladesh Bank (BB) governor.

The recent request came following a drastic fall in wheat import in the country which pushed the prices of wheat-related items up significantly in the market recently.

The food ministry and private importers have blamed the banks for their refusal to open LCs for importing wheat to overcome the crisis.

According to the letter, the country has imported only 0.786 million tonnes of wheat during July-February period of the current fiscal year (FY 2011-12) against a demand of 4-5 million tonnes yearly. Local production of wheat is about 1.0 million tonnes.

The amount of wheat imported during the period is equivalent to only 21 per cent of total import of such items of the corresponding period of FY 2010-11, the letter said.

The food secretary wrote, "Following price increase of atta, maida and other items related to wheat, the government has initiated to sell atta in open market to stabilise the market but all the initiatives have gone in vain due to the shortage of such items in the market."

Chairman and Managing Director of S Alam Group Md Saiful Alam said, "banks, specially the government ones, are responsible for the situation."

"The banks were refusing to open LCs, showing the reason of scarcity of the US dollar in their stock. Some banks are suggesting that the importers should open LCs for comparatively small quantity to lower the pressure on the greenback," he alleged.

"Government banks are widely responsible for creating the crisis as most of the time they directly refuse the importers to open LCs," Alam added.

A high official of Meghna Group, preferring anonymity, said, "Our import of wheat has come down drastically which has thrown us into an embarrassing situation with our wholesalers."

Meanwhile, a high official of Dhaka Bank Ltd told the FE Sunday, "We have been given strict instructions not to spend the greenback, as demanded by the importers, due to its limited stock in the banks".

The banker said, "The stock of greenback is much lower than that of demand from the importers which made us bound to refuse opening of most of the LCs."

However, an executive director of the central bank said, "Immediately after receiving the request from the food ministry, we have given verbal instructions to all the banks to be liberal in opening LCs for such essential items."

Due to the decline in import of wheat, prices of atta, maida and other items related with wheat have gone up by 60-70 per cent within a couple of months," according to market sources of city's Karwan Bazar and Fakirapool area.

"We used to buy 50 kg atta at around Tk 1,000 four months ago but today I bought it at Tk 1,500," Mannan Bhuiyan, proprietor of Mannan Traders at the city's Karwan Bazar area said.

Mannan said, "Demand of atta and maida is high in the market but we are not allowed to buy as much as we want due to shortage in stock."

However, prices of almost all bakery items have also increased across the country due to the crisis, market sources said.

Financial Express/Bangladesh/ 28th March 2012