According to International Monetary Fund (IMF) calculations, the country’s foreign exchange reserves are now below $24 billion. Imports were reined in last fiscal due to low reserves, which had an impact on industrial raw material imports. However, the garment industry, the main foreign exchange earning sector, was immune from its impact. Entrepreneurs of this industry have not faced much problem so far to open back to back LCs (letters of credit) for import of raw materials. However, as the dollar crisis is evident, now this crisis is visible in the clothing sector.
According to the sources related to the garment sector, most of the raw materials of the garment sector have to be imported. But now there are several issues to be faced with opening back to back LCs. Bankers are discouraging opening new loans before paying off the previous loan. They said that the banks are scrutinizing the terms and conditions of opening loans much more than before while giving the highest importance to the issue of dollar reserves.
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