Do you know the main reason behind fuel prices hikes in Bangladesh? In this blog we will explore the reasons behind the fuel price hike in Bangladesh. Are you wondering? why everywhere in the world fuel price are decreasing and why its increasing in Bangladesh? let’s explore all the reasons behind it:

Bangladesh’s retail fuel prices have been hiked to levels not seen since the country’s independence in 1971. The Bangladeshi government on Friday night hiked the fuel prices by up to 51.7% with effect from Saturday, reports Xinhua news agency.

According to a price notification from the Ministry of Power, Energy and Mineral Resources, a liter of octane now costs 135 taka ($1.43), which is 51.7% higher than the previous rate of 89 taka.

The prices of diesel and kerosene have been increased by 42.5% to 114 taka per liter.

Also, each liter of petrol now costs 130 taka, a rise of 44 taka or 51.1%, said the notification.

Officials said the latest price hikes at the retail level were inevitable to reduce the subsidy burden on state-run distribution companies.

Also, fuel prices in the international market are much higher than that in Bangladesh.

Experts said the fuel price hike would worsen inflation, which increased to 7.56 per cent in June, the highest rate in about nine years. (Source)

World wide the price of fuels are decreasing but on the other hand its increasing in Bangladesh. When everywhere is increasing it is constant in Bangladesh. That’s because the Bangladesh government provides a big number of subsidies on fuel which is worth BDT 827.45 Billion. But now the government decided to not provide subsidies on that.

Let’s explore why: 

Main Reason Behind Fuel Price Hikes: 

Bangladesh was seeking a USD 4.5b loan from the IMF. But the IMF implies some conditions for that. The IMF doesn’t like the concept of providing subsidies on fuel by the government. The Bangladesh government provides BDT 827.45b subsidies on fuel. which directly comes from the Tax which is provided by the people of Bangladesh. Government uses a large amount of Tax money only in one sector which is not a great sign for the economy and the people of the country as well. That’s why The IMF implies a condition on that, because The IMF is always concerned about the healthy economical practices. If the government provides subsidies on that they will not provide any loan. 

The IMFs also added some other conditions for banking sectors. The Bangladesh government is currently working on it.