Protests erupt over fuel price hikes . . .
Protests erupted across Bangladesh after the government drastically increased the price of fuel earlier this month. On August 6, the government increased the price of gasoline by 51.7 per cent, petrol by 51.1 per cent, and Kerosene by 42.5 per cent. This is the steepest price rise since the country gained independence in 1971 and is putting a strain on businesses and the local economy. Thousands of angry protestors, including motorbike users, transport workers, students, and supporters of the main political opposition party, the Bangladesh Nationalist Party (BNP), have taken to the streets of the capital city of Dhaka and other major cities calling for a price rollback.
Reasons behind the fuel price hike . . .
The government said that the price increases were needed to help preserve fuel reserves as it implements austerity measures and negotiates with foreign lenders to shore up the country’s dwindling foreign exchange reserves. It also said the price hike was necessary to align with the international market; Bangladesh's new fuel prices are still lower than most of its neighbouring states, including Nepal, India, and Sri Lanka. By minimizing fuel price differences between Bangladesh and its neighbouring states, the adjustment also serves as a control measure to reduce fuel smuggling from Bangladesh to India. Finally, the price adjustment is further a preventative measure to stop the Bangladesh Petroleum Corporation – which has already incurred a loss of more than C$108 million over the last six months – from bankruptcy.
Will Bangladesh’s economy crash?
With Sri Lanka's ongoing economic and political turmoil reaching a critical point, there are increasing international concerns that Bangladesh will soon follow in the footsteps of the island country. Akin to Sri Lanka's downfall, Bangladesh has accumulated a foreign debt of C$79 billion in 2021, a rising trade deficit, and depleting foreign exchange reserves. The Russia-Ukraine war had already spurred commodity price increases in Bangladesh earlier this year; the recent fuel price hike has exacerbated the situation for Bangladeshis. As the nation is in the preliminary stage of seeking a bailout package from the International Monetary Fund (IMF), it remains unclear whether the economic cyclone would bear down more states in South Asia.