DHAKA, Bangladesh: Bangladesh raised fuel prices by some 50 percent this week, which is aimed at reducing the country's subsidy burden, but could further stoke inflation, which is already at above 7 percent.
Surging energy and food prices caused by the Russia-Ukraine war have inflated the south Asian country's import bill, forcing the government to ask for loans from the the International Monetary Fund and other global agencies.
In a statement, the power, energy and mineral resources ministry said gas prices in the country increased by 51.2 percent, 95-octane gasoline by 51.7 percent, and diesel and kerosene by 42.5 percent.
The ministry added that the fuel price increase was inevitable, given global market conditions, noting that state-run Bangladesh Petroleum Corporation lost more than $85 million on oil sales in the six months ending in July.
Meanwhile, Nasrul Hamid, state minister for power, energy and mineral resources, told reporters, "The new prices will not seem tolerable to everyone. But we had no other choice. People have to be patient."
However, opposition Bangladesh Nationalist Party Secretary General Mirza Fakhrul Islam Alamgir said the hike would have a negative effect on the economy.
"We are already struggling to make ends meet. Now that the government has raised fuel prices, how will we survive?" asked Mizanur Rahman, a private sector employee, as quoted by Reuters.
With worries of a recession sparked by fuel demand, global oil prices have eased from their highs in recent weeks, and closed at their lowest levels since February.
To counter dwindling foreign exchange reserves, the Bangladeshi government has adopted a series of measures, including restricting fuel imports, liquefied natural gas, and closing diesel-run power plants, as it again faces recurring power outages.
As of 3rd August, the country's foreign exchange reserves stood at $39.67 billion, which covers only about five months of imports, though it has decreased from $45.89 billion one year earlier.