The government has increased fuel prices and initiated an upward adjustment of the dollar exchange rate to meet conditions set by the International Monetary Fund (IMF).
Multiple sources familiar with the matter confirmed to TIMES of Bangladesh that these policy measures are intended to secure the release of outstanding tranches of an ongoing $5.5 billion loan programme and to ensure new budget support.
The measures include reducing fuel subsidies, transitioning towards a market-oriented exchange rate, limiting quasi-fiscal or indirect government financial activities, and intensifying reforms within the banking and revenue sectors.
In this context, Bangladesh Bank has resumed purchasing dollars from the market after a hiatus of one and a half months.
The central bank bought a total of $120 million over Wednesday and Thursday, at a rate of Tk 122.75 per dollar. Previously, the rate had been maintained at Tk 122.30 for an extended period.
Central bank sources indicated that further dollar purchases might occur on Sunday. Officials stated that these steps are part of a phased adjustment to move the exchange rate to a market-based level, which remains a critical IMF condition.
Simultaneously, the government has announced a hike in fuel prices at the consumer level to alleviate the subsidy burden on the energy sector.
Under the new rates, effective after midnight on Saturday, diesel is priced at Tk115 per litre, octane at Tk140, petrol at Tk135, and kerosene at Tk130.
This reflects a significant increase compared to the prices set on 1 February. The price of diesel has risen by Tk15 per litre, kerosene by Tk18, octane by Tk20, and petrol by Tk19.
In a press release, the Ministry of Power, Energy and Mineral Resources stated that this price adjustment was made to maintain harmony with the international market and ensure the stability of the supply system.
However, there are concerns regarding the broader economic impact of these hikes. Stakeholders fear that rising transport costs will lead to increased agricultural production expenses and a general rise in consumer spending.
Policy-level sources suggest that the government is accelerating these reforms to demonstrate progress in ongoing discussions with the IMF.
The organisation has long emphasised the need to limit subsidies, increase revenue collection, ensure discipline in the financial sector, and allow for greater flexibility in the exchange rate.
With the IMF board meeting scheduled for June, the pace of these reforms is being increased. Observers believe that the release of the next loan instalment and the future of new financing will depend on how quickly and effectively these measures are implemented.
The government is currently expecting $1.3 billion from the existing loan package and a further $2 billion in budget support from the IMF.
