Bangladesh announces an increase in fuel prices, raising concerns about inflation.
Bangladesh raised fuel prices by nearly 50% on Saturday, reducing the country’s subsidy burden but increasing pressure on inflation, which is already above 7%. For years, the $416 billion economy of this South Asian country has been one of the fastest-growing in the world.
However, rising oil and food prices as a result of the Russia-Ukraine conflict have increased its import bill, pushing the government to seek loans from global institutions such as the International Monetary Fund. The price of petrol has risen by 51.2 percent to 130 taka ($1.38) a litre, 95-octane gasoline by 51.7 percent to 135 taka, and diesel and kerosene by 42.5 percent,
according to the electricity, energy, and mineral resources ministry.The ministry stated that the fuel price hike was unavoidable given global market conditions, saying that the state-run Bangladesh Petroleum Corporation had lost more than 8 billion taka ($85 million) on oil sales in the six months to July.
“The new prices will be unpalatable to many people. But we didn’t have an option. People must be patient “On Saturday, Nasrul Hamid, the state minister for power, energy, and natural resources, told reporters. He stated that if global prices fell, prices would be modified. “It was necessary, but I had not anticipated such a steep ascent. I’m not sure if the government is meeting the requirements for an IMF loan “According to a government official.
The main opposition Bangladesh Nationalist Party (BNP) Secretary General Mirza Fakhrul Islam Alamgir described the government’s plan as “rubbing salt in the wounds,” saying the hike will be disastrous for the economy. Bangladesh’s inflation rate has remained above 6% for nine months in a row, reaching 7.48 percent in July, placing pressure on poorer households to meet their daily needs and increasing the possibility of civil upheaval.
“Already, we are trying to make ends meet. How will we live now that the government has hiked fuel prices? “Mizanur Rahman, a private sector employee, stated The government last boosted diesel and kerosene rates by 23% in November, resulting in an almost 30% increase in transportation fares
Global oil prices have fallen from recent highs and closed on Friday at their lowest levels since February, roiled by fears that a recession will reduce fuel demand. Brent crude futures slipped below $95 per barrel on Friday, having peaked at $133.18 in March.
In response to depleting foreign exchange reserves, the government has implemented a number of measures, including restrictions on luxury goods imports and fuel imports, notably liquefied natural gas (LNG), and the shutdown of diesel-powered power facilities. As of August 3, the country’s foreign exchange reserves stood at $39.67 billion, enough to cover only approximately five months of imports and down from $45.89 billion a year earlier.