Govt increases fuel price to get IMF loan: Experts
Oil price declines 32pc in global market07 August 2022
Anisur Rahman Khan :
When the fuel price in the global market is declining by 32 per cent, the government has taken a whimsical and suicidal decision to raise the fuel prices overnight only to appease the International Monetary Fund (IMF).
The international lenders have tagged a number of pre-conditions including the reduction of subsidy from fuels before offering loans to any country. In a bid to obtain the loans from IMF, the government has hiked the fuel price to unburden its subsidy from the fuels, experts observed.
Earlier on July 27, Prime Minister Sheikh Hasina had said that the country had much more petrol and octane in reserve than demands.
"We have much more petrol and octane than the demands, even we can sell these sometimes. It is true that Bangladesh needs to import diesel. But it doesn't import petrol and octane as the country gets these as byproducts of gas extraction," the premier had said.
Meanwhile, global oil prices dropped on Thursday to their lowest levels since before Russia's February invasion of Ukraine, as traders fretted over the possibility of an economic recession later this year that could torpedo energy demand.
Benchmark Brent crude futures settled down $2.66, or 2.75 percent, at $94.12 per barrel from peak of $139 per barrel which is 32 percent decline, the lowest close since February 18. "It is logical to increase the fuel price at this moment-but the government should have to announce right now that it will reduce the price immediate after falling the oil price in the international market," Dr Ahsan H Mansur, IMF's ex-economist told The New Nation.
When asked the oil price hiked to get IMF loan, he replied, "Yes, it is relevant. At the same time, it is not only the cause to get IMF loan. The government needs foreign currency. But the government should be cautious in spending the money if it get loans from the World Bank or IMF."
"Though the Bangladesh Bank (BB) is showing its forex reserve at this moment $39 billion, but the actual reserve is below the estimated figure. The government won't able to hide the actual reserve, when it will place statement before the IMF to get loan," Dr Reza Kibria, IMF's ex-economist told The New Nation on Saturday.
The government has been taking initiatives in advance to make the IMF happy following hiking the fuel price, he said and added "IMF has various pre-conditions including reduction of subsidy to get loan from them. So, the government has suddenly hiked the oil prices overnight without any prior notice, it is nothing but to get the loan from IMF."
Professor Anu Mihammad, Member Secretary of the National Committee to Protect Oil, Gas, Mineral Resources, said that the government wants to prove off and on that they are more interested and felt happy by increasing the sufferings of the people and the chain of economy.
Despite many better alternatives, how does the government increase the prices of diesel, petrol and octane such a high rate in just a few months?, he questioned?
The government will give some lame excuse by saying oil prices have been increased in the world market, so it has to be forced to increase, which is totally wrong in many ways.
First of all, the price of oil in the global market is not going up, but downwards, he said adding that oil prices are falling fast.
Earlier, when the price of oil in the world market was very low, the government made a profit of Tk 47,000 crores in a few years, this profit is several times more than the losses incurred in the last few days. That means if the government thought about the public interest and the economy, it could have prevented this loss with a portion of the profit, he said.
"Many countries are trying to keep prices down by withdrawing tariffs on oil imports, realizing the dire consequences of raising prices. The government has not done that either. Fourthly, the Prime Minister told us a few days ago that we don't have to buy octane and petrol, there is a surplus in the country. Making people's lives miserable and endangering the economy, there is no other reason for raising the prices of diesel, octane and petrol in a completely unreasonable manner except looting money by some government officials. The government thinks that they can do whatever they want under the dictatorial power!," Prof Anu Muhammad said.