Minister says Bangladesh may hike fuel prices as subsidy burden strains finances

It will impact overall budget, development activities, and promises to provide social safety nets, he says

Finance Minister Amir Khosru Mahmud Chowdhury has warned that the skyrocketing cost of fuel in the global market is "severely draining" the finances, hinting that a domestic price hike may be unavoidable if the Middle East conflict persists.

Speaking to reporters on Friday after an award ceremony at the Korean EPZ in Chattogram, he admitted that while the government has managed to maintain supply so far, the financial burden of massive subsidies is becoming unsustainable.

“The ongoing war in the Middle East is not just a crisis for Bangladesh, it is a global one. Most of our oil and gas supplies come from that region. The war essentially threatens to shut down our supply chain,” the minister said.

The finance minister emphasised that the government is prioritising energy security regardless of the cost to prevent an economic standstill.

“We are having to buy fuel at much higher prices, which is creating a massive strain on the government’s funds. But we have no option,” he said.

Warning that the current situation cannot continue indefinitely, he added: "It remains to be seen how long we can continue to buy oil and gas at such high rates.”

“It is constantly eroding the government's coffers. If this continues, it will impact our overall budget, development activities, and our promises to provide social safety nets for the common man."

Regarding a potential price adjustment, the minister noted: “There is a high chance that a decision [to increase prices] will come soon. If the state treasury is emptied by buying at high prices, we won't be able to provide the solutions we promised to the people.”

The government has already implemented several austerity measures to combat the crisis.

Khosru revealed that he and other government officials are now subject to fuel rationing.

The minister urged the general public to be economical in their energy consumption to help navigate the global challenge.

The fuel supply has come under pressure due to the US-Israel war on Iran.

Long queues of vehicles for fuel are a common sight at petrol pumps every day.

The illegal hoarding of fuel has raised concerns for the government, leading to nationwide drives to stop such practices. Consequently, 375,000 litres of fuel have been seized over the past month.

As austerity measures, the government has also reduced office hours by one hour and to close shops and malls after 6pm.