Bangladesh warns of soaring fuel prices, stoking inflation fears


A gas station worker wearing a protective suit pumps fuel into a customer’s car amid concerns over the coronavirus disease (COVID-19) outbreak in Dhaka, Bangladesh April 20, 2020. REUTERS/Mohammad Ponir Hossain

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DHAKA, Aug 6 (Reuters) – Bangladesh has hiked fuel prices by up to 51.7% from Saturday, a move that will reduce the country’s subsidy burden but add pressure on already high inflation.

The South Asian country’s $416 billion economy has been one of the world‘s fastest growing in years.

However, soaring energy and food prices have inflated its import bill, prompting the government to seek loans from global lenders, including the International Monetary Fund. Read more

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The fuel price hike was inevitable given global market conditions, the ministry said in a statement, noting that the state-run Bangladesh Petroleum Corporation (BPC) suffered a loss of more than $8 billion. taka ($85 million) on oil sales over the next six months. July.

“The new prices will not seem tolerable for everyone. But we had no other choice. People have to be patient,” Nasrul Hamid, minister of state in charge of electricity, electricity, told reporters on Saturday. energy and mineral resources. He said prices would be adjusted if world prices fell.

“It was necessary but I never imagined such a drastic increase. I don’t know if the government fulfills the precondition to have an IMF loan,” said a government official. Read more

“At a time when people are already suffering from soaring commodity prices, any rise in oil prices will further increase their burden,” the official added.

Bangladesh’s inflation rate has exceeded 6% for nine consecutive months, with annual inflation in July reaching 7.48%, putting pressure on poor and middle-income families to meet their daily expenses.

This in turn increases the risk of social unrest in the country of 165 million people.

“We are already struggling to make ends meet. Now that the government has raised fuel prices, how are we going to survive?” said Mizanur Rahman, a private sector employee.

Global oil prices closed the week on Friday at their lowest levels since February, rocked by fears that a recession could affect fuel demand.

Benchmark Brent crude futures fell below $95 a barrel on Friday after hitting a recent high of $133.18 in March. Read more

The government last raised diesel and kerosene prices by 23% in November, leading to an almost 30% increase in transport tariffs.

Faced with dwindling foreign exchange reserves, the government has taken a series of measures, including limiting imports of luxury goods and fuel, including liquefied natural gas (LNG), and closing diesel power plants in due to recurring power outages.

The country’s foreign exchange reserves stood at $39.67 billion as of August 3, enough to cover only about five months of imports and down from $45.89 billion a year earlier.

($1 = 94.4400 taka)

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Reporting by Ruma Paul; edited by Jason Neely

Our standards: The Thomson Reuters Trust Principles.

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