Global energy prices have surged significantly due to the ongoing conflict in the Middle East, with fuel oil prices rising by approximately 49 percent and LNG by nearly 83 percent. The price of fuel oil has jumped from a pre-war level of $67 per barrel to $100, while LNG prices have climbed from $10–12 to $20–22 per MMBtu. In this volatile market, Bangladesh is facing a massive spike in import costs. To maintain a steady supply without hiking domestic prices, the government requires an additional $3 billion by June. To secure this funding, the government has initiated efforts to obtain loans from several international agencies.
According to data from the Bangladesh Petroleum Corporation (BPC), the import projection for the 2025–26 fiscal year includes 6.56 million tons of refined oil and 1.4 million tons of crude oil, with an estimated expenditure of BDT 912.96 billion. Meanwhile, Petrobangla plans to import 115 cargoes of LNG from both long-term contracts and the spot market in FY 2025-26, with a projected cost of BDT 515.40 billion.
The Middle East crisis has already forced Bangladesh to purchase several LNG cargoes at double the previous rates.
A preliminary assessment by the Finance Division indicates that the $3 billion shortfall must be covered within the remainder of the current fiscal year. Officials noted that since the revised budget for FY 2025-26 has already been allocated and revenue collection remains limited, there is little room for additional domestic spending. Furthermore, as fuel must be paid for in foreign currency, considering all aspects, there is no way without taking loans from international organizations. Besides, meeting the cost from internal resources would lead to a significant depletion of foreign exchange reserves. Consequently, the government is seeking financial assistance from the International Monetary Fund (IMF), World Bank, Asian Development Bank (ADB), and the Asian Infrastructure Investment Bank (AIIB). The government expects approximately $1.5 billion from the IMF and has already requested $250 million in budget support from the ADB. Apart from these, budget support will also be sought from the World Bank and AIIB. Finance and Planning Minister Amir Khasru Mahmud Chowdhury is expected to hold discussions with senior officials of the World Bank and IMF regarding these credit requirements during the upcoming Spring Meetings next month.
The Bangladesh government is moving to secure a $2 billion loan to stabilize the country’s Balance of Payments (BoP), which has come under significant pressure due to the ongoing conflict in the Middle East. Preliminary discussions are currently underway with the International Monetary Fund (IMF) and several other international sources. Bangladesh Bank Governor Md Mostaqur Rahman shared this information on Sunday during an exchange of views with senior economic journalists. Responding to a query regarding the funding, the Governor stated, “We’ll seek approximately $2 billion in BoP support. Discussions are currently at a very primary stage. This additional funding is intended for the Balance of Payments, and those with whom discussions are also assessing the evolving situation.”
Regarding the potential sources of the credit, the Governor noted, “We’ve primarily approached the IMF. Additionally, the External Resources Division (ERD) is exploring other avenues to secure further funding.”
A persistent liquidity crunch, particularly a shortage of US dollars, has previously hampered Bangladesh’s ability to settle fuel import bills on time. To address this, the government turned to the World Bank last year, securing a $350 million credit facility for LNG imports from both long-term and spot markets. Recently, Bangladesh requested the World Bank to increase this facility by an additional $350 million.
Dr Zahid Hussain, former Lead Economist of the World Bank’s Dhaka office, told Bonik Barta that the global energy crisis sparked by the Middle East conflict will lead many countries to seek international loans simultaneously. “Consequently, Bangladesh will face stiff competition in securing funds. Taking such financing requires adequate preparation and a clear demonstration of the government’s austerity measures to mitigate the situation. The impact of the damage caused by the war will last for a long time. While the initial shocks of the Russia-Ukraine war subsided after a few months, the current conflict in the Middle East appears to be widening. We must plan with the assumption that the impact of this war will persist through the current and the upcoming fiscal years,” Dr Hussain added.
Bangladesh imports approximately $12 billion worth of fuel annually, including LNG, refined and crude oil, LPG, and coal. According to the Energy and Mineral Resources Division, 26.74 percent of the country’s primary energy is derived from natural gas, followed by biomass (22.99 percent), imported coal (19.13 percent), fossil fuels (11.36 percent), LNG (10.83 percent), imported electricity (3.3 percent), LPG (2.6 percent), and renewable sources (2 percent).
Bangladesh’s reliance on Liquefied Natural Gas (LNG) imports continues to escalate as domestic gas extraction remains insufficient to meet national demand. Since the commencement of long-term LNG imports from Qatar and Oman in 2018 — and the subsequent foray into the spot market in September 2020 — the government has been bearing a massive financial burden. According to Petrobangla data, the government spent a staggering BDT 1.99 trillion over the seven-year period from FY 2018-19 to FY 2024-25 to procure LNG.
Analysts warned that utilizing internal resources to cover these additional fuel costs would exert further downward pressure on the country’s foreign exchange reserves. Such a scenario would strain the macroeconomy, making it imperative to secure alternative funding sources under the current circumstances.
Professor Dr Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), told Bonik Barta, “It’s a prudent strategy for the government to seek external funding to prevent excessive pressure on our foreign exchange reserves due to rising fuel costs. In this context, the government strategy is right. The focus should be on securing loans with easy terms and concessional interest rates. If the increased cost of energy imports depletes reserves significantly, it will trigger adverse effects across the macroeconomy, including stricter import controls and exchange rate volatility. From this perspective, sourcing funds from international agencies is a sound approach.”
Sources within the Finance Division and the Economic Relations Division (ERD) indicated that international lenders have responded positively to Bangladesh’s requests. During a recent meeting with Finance and Planning Minister Amir Khasru Mahmud Chowdhury, Krishna Srinivasan, Director of the IMF’s Asia and Pacific Department, assured support in navigating the economic challenges stemming from the global conflict. While the government was already slated to receive two budget support packages worth $250 million and $500 million from the ADB this fiscal year, it has requested that the $500 million portion be increased to $750 million. If approved, total assistance from the ADB could reach $1 billion this fiscal year. Additionally, the government remains optimistic about receiving a positive response from the World Bank.