Middle East unrest pushes Bangladesh’s subsidy burden up by Tk42,600cr: Khosru

Finance Minister Amir Khosru Mahmud Chowdhury on Tuesday informed the Parliament that Bangladesh requires an additional subsidy of approximately Tk42,600 crore for four sectors -- oil, gas, electricity, and fertiliser -- in the outgoing fiscal year of 2025-2026 due to the ongoing conflict in the Middle East.

“Recent conflicts in the Middle East, including Iran, and the instability in the global energy market have put additional pressure on the (Bangladesh) government's subsidy spending in the oil, gas, electricity, and fertiliser sectors. The additional subsidy requirement in these four sectors alone is about Tk42,600 crore by June in the 2025-26 Fiscal Year,” he said citing preliminary estimate.

The finance minister said this, while responding to a starred question from ruling party lawmaker SM Jahangir Hossain (Dhaka-18) who asked to know whether Bangladesh incurred any economical or business loss due to the recent war in the Middle East.

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Of the additional amount of the subsidy, some Tk10,258 crore may be required for oil, Tk11,170 crore for gas, Tk19,821 crore for electricity and Tk1,350 crore for fertiliser, he said.

Amir Khosru said the recent unrest in the Middle East, including Iran, has posed both immediate and potential risks to the Bangladesh economy.

“So far, the impact has been mainly visible in the areas of fuel, fertiliser, import costs, transport costs, inflation, foreign exchange management, remittances and foreign employment,” he said.

He said the increased prices of fuel oil, LNG and fertilizers in the international market have put pressure on import costs and production costs. The energy price-hike could increase costs in the electricity, transport, agriculture and industrial sectors, which can indirectly affect market prices and inflation.

Khosru said as the Middle East is an important destination for Bangladeshi expatriate workers, the prolonged instability can also pose risks to foreign employment and remittance inflows.

Noting that the government is closely monitoring the situation, the finance minister said a number of steps are being taken to address the current situation such as sources diversification for energy imports, exploring local gas, maintaining normal supply of essential goods, remaining cautious over foreign exchange management, and exploring alternative labour markets.