from AFP via Google
DHAKA — Impoverished Bangladesh became the latest victim of surging global crude costs Monday with the government announcing it has been forced to hike state-set fuel prices by between 34 and 66 percent.
Authorities said they had no alternative to the sharp increases because the country could no longer afford to sell petrol, diesel, kerosene and gas at subsidised rates that were set when a barrel of oil cost just 60 dollars.
On Monday, oil was trading close to 144 dollars a barrel.
"Frankly speaking, we had no choice. It was unavoidable," Bangladesh's deputy energy minister M. Tamin told AFP.
"The oil subsidy still accounts for 40 percent of the government's development budget. Imagine a situation where crude oil goes up to 200 dollars a barrel. All development in Bangladesh will stop," he said.
The price rises represent a major blow for the country, one of the world's poorest, where nearly 40 percent of the 144 million population survive on less than a dollar a day.
The country is already suffering from rising food prices, with the price of rice -- a staple in the South Asian nation -- nearly doubling over the past year.
"It's an international crisis. We think rich countries, oil-producing countries and the United Nations should deal with the issue urgently," Tamin said.
Starting Tuesday, the price of diesel and kerosene is to go up by 37.5 percent to 55 taka (80 US cents) per litre (0.26 gallon), while petrol prices will increase by 34 percent to 87 taka per litre, the ministry said.
The price of furnace oil, used in small factories, has been increased by 50 percent, while a cylinder of gas used for cooking will go up by 66 percent.
"The prices of petroleum products have been increased due to the massive increase in global oil prices. It has been putting huge pressure on the government's budget," energy ministry spokesman Afrazur Rahman explained.
"Even with the hike, the government will have to spend 100 billion taka (1.45 billion dollars) as subsidies on fuel" over the next financial year, he said.
The official added that even with the sharp rises, fuel prices in Bangladesh were among the lowest in the region and that state-owned Bangladesh Petroleum will still be selling fuel at a 40 percent loss.
The government last increased fuel prices in April 2007. World crude oil prices have since more than doubled, costing the impoverished country more than one billion dollars in subsidies in the fiscal year that ends on Monday.
Economist Apiur Rahman, the head of Development Coordination -- a Bangladeshi think-thank -- said the global surge and the resulting domestic hike could be catastrophic for millions in the country.
"It's very bad news for the country's farmers, for rural poor, and even middle income people," he said.
"It will drive millions of people into poverty. Inflation will jump immediately. But the government had no choice, its hands were tied. It had to raise prices."
He called on the government to "increase subsidies in other areas" -- such as for staple foods and healthcare -- to lessen the blow to the poor.
Economic development in Bangladesh has taken several blows over the past 18 months, beginning with political instability and the imposition of a state of emergency in January 2007.
It was then hit by highly destructive floods and a massive cyclone the same year.
Link to full article. May expire in future.
Why we can still end world poverty during coronavirus - World Economic Forum - Why we can still end world poverty during coronavirus World Economic Forum
1 hour ago