Bangladesh announces fuel price hike, fuels inflation fears

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DHAKA: Bangladesh has raised fuel prices by 51.7 percent from Saturday, a move that will reduce the country’s subsidy burden but put even more pressure on already high inflation.

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

However, rising energy and food prices have pushed up the import bill, prompting the government to seek loans from global credit institutions, including the International Monetary Fund.

The rise in the fuel price was inevitable given global market conditions, the ministry said in a statement, noting that the state-run Bangladesh Petroleum Corporation (BPC) was in the six months to July.

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

“It was necessary, but I never imagined such a drastic increase. I don’t know if the government meets the condition to get an IMF loan,” said a government official.

“At a time when people are already suffering from the rising prices of essential commodities, any increase in petroleum prices will add to their burden,” the official added.

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Inflation in Bangladesh has surpassed 6 percent for nine months in a row, with annual inflation reaching 7.48 percent in July, putting pressure on poor and middle-income families to meet their daily expenses. .

That 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 increased fuel prices, how will we survive?” said Mizanur Rahman, a private sector worker.

Global oil prices ended the week on Friday at their lowest levels since February, shaken by concerns that a recession could affect fuel demand.

Benchmark Brent oil futures fell below $95 a barrel on Friday, after a recent high of $133.18 in March.

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The government last raised diesel and kerosene prices by 23 percent in November, which in turn led to a nearly 30 percent increase in transportation tariffs.

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

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

($1 = 94,4400 tax)

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