FEPD Circular Letter No. 27: Payment in foreign exchange against local supply of goods

Foreign Exchange Policy Department Bangladesh Bank Head Office Dhaka. www.bb.org.bd Circular Letter No. 27 Date: 29.07.2020 Head offices/principal offices of all Authorized Dealers in Bangladesh. Dear Sirs, Payment in foreign exchange against local supply of goods

Please refer to paragraph 35, chapter 7 of the Guidelines for Foreign Exchange Transactions (GFET)-2018, Vol-1 in terms of which Authorized Dealers (ADs) can, on behalf of Government authorities, establish Letters of Credit (LCs) in foreign exchange favoring local contractors to implement work orders under international tender. The paragraph also allows ADs to settle import payment obligations of local contractors out of the fund retained in foreign exchange for 30 days as per paragraph 42(ii) of this chapter. 02. This is to clarify that procurements, from local sources by above mentioned contractors, need to be settled in local currency to implement the work orders. Such local payments cannot be made in foreign exchange retained as per paragraph 42(ii), chapter 7 of GFET or from the own sources of ADs. In this context, explanation letter number 04/VAT/2020 of July 20, 2020 from the National Board of Revenue may be consulted for further clarification. Please bring the contents of this circular letter to the notice of your concerned clientele.

Yours faithfully, (Mohammad Khurshid Wahab) General Manager Phone: 9530123