Banks asked to arrange dollars for opening LCs

Banks have been asked to allow about 25 per cent higher imports but they will have to arrange dollars before opening letters of credit (LCs), sources in the banking industry told Dawn on Thursday. A shift has taken place regarding the arrangement of dollars. Bankers said they have been asked by the State Bank of Pakistan (SBP) to arrange dollars before opening LCs which will limit imports due to the non-availability of dollars. Earlier, importers were given the responsibility to arrange dollars for opening LCs to import raw materials which relatively eased the situation for industries but at the same time, it strengthened the black marketing of dollars. Importers started purchasing greenbacks at higher prices, up to Rs20-25 per dollar, from the grey market which widened the rate gap between the interbank and open markets resultantly remittances started declining while export proceeds were sold in the grey market or were held back for higher rates. Despite a 31pc decline year-on-year, the imports totalled $55.29 billion with a trade deficit of $27.55bn in FY23.