DHAKA Bangladesh raised fuel prices by up to 51.7 per cent with effect from Saturday, a move that will trim the country's subsidy burden and put more pressure on already high inflation.
The economy of the South Asian country's $416 billion has been one of the fastest-growing in the world for years.
The import bill was inflated due to soaring energy and food prices, prompting the government to seek loans from global lending agencies, including the International Monetary Fund.
The ministry said that the fuel price increase was unavoidable because of global market conditions, and that state-owned Bangladesh Petroleum Corporation BPC had lost more than 8 billion taka $85 million on oil sales in the six months to July.
The new prices won't seem to be tolerable for everyone. We had no other choice. Nasrul Hamid, state minister for power, energy and mineral resources, told reporters on Saturday that people have to be patient. If global prices fall, prices would be adjusted.
It was necessary but I never imagined such a drastic hike. I don't know whether the government has an IMF loan, or if it's meeting the requirements, a government official said.
The hike in petroleum prices will add to the burden of the people, as they suffer from the spiralling prices of essential commodities, the official said.
Inflation in Bangladesh has topped 6 per cent for the past nine months, with annual inflation hitting 7.48 per cent in July, putting pressure on poor and middle-income families to meet their daily expenses.
There is a risk of social unrest in the country of 165 million people because of that.
We are struggling to make ends meet. How can we survive now that the government has raised fuel prices? Mizanur Rahman is a private sector employee.
On Friday, global oil prices were at their lowest level since February, as investors worried that a recession could affect fuel demand.
The benchmark crude futures price fell below the $95 per barrel on Friday after hitting a recent peak of $133.18 in March.
The transport fares went up nearly 30 per cent after the government raised diesel and kerosene prices by 23 per cent in November.
The government has taken a series of measures, including putting restrictions on luxury goods imports and shutting off diesel-run power plants as it resorted to recurring power outages, because of dwindling foreign exchange reserves.
As of Aug. 3, the country's foreign exchange reserves stood at $39.67 billion, enough to cover only about five months of imports, and down from $45.89 billion a year earlier.