Energy and external sectors are coming under mounting pressure as the government turns to costly alternative fuel imports amid global supply disruptions and escalating tensions in the Middle East.
Rising import bills, growing strain on foreign exchange reserves, and uncertainty over remittance inflows are heightening macroeconomic risks, forcing policymakers to balance energy security with financial stability.
Analysts warn that if the situation does not stabilise by June, Bangladesh may face an additional US$3 billion in energy-related expenditure.
In response, the government has accelerated procurement efforts.
Emergency virtual meetings of the Cabinet Committee on Economic Affairs and the Cabinet Committee on Government Procurement were held on Saturday, despite the public holiday, chaired by Finance and Planning Minister Amir Khasru Mahmud Chowdhury.
The government plans to import 17 lakh tonnes of refined fuel oil through direct procurement from the United Arab Emirates, Kazakhstan, and Oman, marking the largest single fuel import initiative by the Bangladesh Petroleum Corporation (BPC).
The imports will include 16 lakh tonnes of diesel and one lakh tonnes of petrol.
At Saturday’s meeting, the procurement committee approved a proposal to purchase 1 lakh tonne of diesel from Kazakhstan, along with two LNG cargo import proposals.
Earlier, on 31 March, a separate proposal to import 2.6 lakh tonnes of fuel was approved to meet urgent demand.
The surge in procurement comes after supply chain disruptions linked to recent attacks on Iran by the United States and Israel, which have affected the Strait of Hormuz, a critical route for nearly 20% of global oil trade.
According to BPC data, Bangladesh received more than 3.27 lakh tonnes of fuel oil in 11 shipments in the month following the escalation, along with 22,000 tonnes of diesel via pipeline from India.
The corporation is now increasingly seeking alternative suppliers to ensure supply continuity.
Bangladesh imports around 65 lakh to 68 lakh of fuel annually, with diesel and crude oil accounting for the bulk. As a result, any increase in global prices directly raises import costs.
Speaking in Chattogram, the finance minister warned that the ongoing conflict risks further disrupting oil and gas supply chains, forcing Bangladesh to procure fuel at higher prices.
He said the government is taking all necessary steps to ensure energy security without compromise.
Economists caution that rising fuel costs, higher import bills, declining reserves, and potential disruptions to remittance inflows from the Middle East are creating a complex economic challenge.
Former World Bank chief economist Dr Zahid Hussain said the conflict has not yet significantly affected expatriate workers.
“There are some isolated incidents, but no clear evidence of widespread job losses or wage cuts,” he said, noting that remittance flows have remained stable so far.
However, he warned that a decline in remittances alongside rising import costs would create dual pressure on foreign exchange reserves.
“A fall in remittances would reduce dollar supply in the market, putting further pressure on reserves and potentially weakening the taka, making imports, especially fuel and food, even more expensive,” he said.
Amid the global uncertainty, the US dollar has strengthened to around Tk123 in the interbank market, adding further pressure on the local currency.
Reserves under pressure
To meet rising import demand, Bangladesh Bank has been supplying dollars from its reserves. As a result, reserves have declined by over $1 billion in the past month.
Central bank data show gross reserves fell from $35.03 billion on 25 February to $33.99 billion by the end of March. Under the IMF’s BPM6 methodology, reserves declined from $30.27 billion to $29.29 billion during the same period.
Following remittance inflows, reserves recovered slightly to $34.43 billion (gross) and $29.81 billion (BPM6) as of 2 April. However, with more than $1 billion in Asian Clearing Union (ACU) payments due this month, further pressure is expected.
Remittances offer support, but risks loom
Strong remittance inflows have provided some relief. Bangladesh Bank data show remittances reached nearly $3.75 billion in March, a record for a single month.
A significant share of these inflows comes from Middle Eastern countries, including Saudi Arabia, the United Arab Emirates, Qatar, Oman, and Kuwait, underscoring the region’s importance for Bangladesh’s foreign exchange earnings.
However, economists warn that prolonged instability in the Middle East could disrupt remittance flows.
Zahid Hussain cautioned that many workers are already facing logistical challenges. “If the situation persists, companies may struggle to continue paying wages, which could eventually affect remittances,” he said.
Courtesy: Daily Sun.
Bd-pratidin English/TR
