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“However, the government is trying to fix all the things from the stock market to the interest rate of the banking sector,” said Mansur.

“In reality, the fixing policy is not working in any sector.”

The former economist of the International Monetary Fund warns that if manufacturers continue to face challenges in opening LCs, it will squeeze production and job creation will be impacted.

Owing to the dollar crunch, LC opening slumped 14 per cent year-on-year in July-December of the current financial year of 2022-23. Settlement declined 9 per cent, central bank data showed.

Mansur advised the government to reduce the costs of local-funded projects and speed up the implementation of foreign-funded projects.

The implementation of foreign-funded projects under the Annual Development Programme has remained slow, with just 26.5 per cent of the allocation being spent in the first six months of 2022-23.

AB Mirza Azizul Islam, a former adviser to the caretaker government, says since the sourcing of raw materials in the manufacturing sector is almost entirely import-dependent, the government should ensure their smooth imports.

“Otherwise, a dearth of raw materials would create disturbance in the economy.”

The cost of manufacturing has already gone up owing to the hikes in the tariffs of gas and electricity, higher raw material prices globally, and escalated freight costs.

The government has raised the retail price of gas by 14.5 per cent to 178.9 per cent for industries, power plants and commercial establishments, effective this month.

On Tuesday, the government increased the electricity price once again by 5 per cent at the retail level -- the second hike in 19 days as it steadily retracts subsidies from the power sector.

Islam also thinks that a market-based exchange rate may give some relief now.

“It may bring about the devaluation of the local currency. But remittance flow will be higher. On the other hand, capital flight will be costlier amid a higher exchange rate regime.”

As the demand for US dollars can’t be met, banks are delaying the opening of LCs, so the government should try to increase the supply of the American greenback, said Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development.

Export and remittance receipts have to be increased to ensure higher availability of the US dollar, he said, adding that the loans from the IMF may improve the situation.

On January 30, the IMF approved a $4.7 billion credit facility for Bangladesh.

Mujeri, also a former director-general of the Bangladesh Institute of Development Studies and a former chief economist of the central bank, says if the government allows a market-based foreign exchange rate and lets a slow depreciation of the local currency, it may offer some respite since the move is expected to bring down the demand for dollars.

“However, a higher depreciation will fuel inflationary pressure, so the process should be slow.”