Middle East crisis adds $4-5b to Bangladesh's fuel bill: FinMin
The government is also working to build a three-month fuel reserve, he says.
The Middle East crisis has increased Bangladesh's fuel import bill by an additional $4-5 billion, Finance Minister Amir Khosru Mahmud Chowdhury said today (22 August), warning that the country's gas and electricity shortages cannot be resolved overnight.
"We are trying to resolve them. The energy crisis will be addressed, but it will take time," he said at a seminar organised by the Dhaka Chamber of Commerce and Industry (DCCI).
The seminar, "Biannual Economic Situation of FY2026, Context of Fiscal and Monetary Policy and Expectations of the Private Sector", brought together government officials, business leaders, financial-sector representatives and researchers.
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Khosru said coordinating all energy sources was a government priority, with an initial focus on solar power. The government has introduced various incentives in the budget to encourage investment in renewable energy and urged entrepreneurs to take advantage of them.
The government is also working to build a three-month fuel reserve, he said.
Business leaders, however, warned that persistent energy shortages, high borrowing costs, inflation, rising non-performing loans and regulatory barriers are restricting private investment and industrial expansion.
Presenting the keynote paper, DCCI President Taskeen Ahmed said private-sector credit growth had fallen to just 5%, while government-sector credit growth had reached 25.9%.
He called for strengthening the capital market to reduce businesses' dependence on bank financing, urging large-scale investment in logistics through public-private partnerships.
Credit flow to the cottage, micro, small and medium enterprise sector stood at 16.8%, against a target of 25%, while its non-performing loan ratio had risen to 24.1%, he said.
He proposed replacing collateral-based lending with digital credit scoring based on cash flow and establishing a dedicated fund to help small businesses purchase machinery at affordable costs.
Taskeen also called for low-interest financing for farmers to adopt solar-powered irrigation, diversification of fuel import sources and stronger offshore exploration involving local and international investors.
Hossain Zillur Rahman, executive chairman of the Power and Participation Research Centre, said Bangladesh was at a critical economic juncture where timely decisions could accelerate growth, while delays could deepen existing challenges.
He said, "Harassment has become a negative structure in different areas of the economy. The government needs to focus on this," stressing the need for political commitment to reduce such practices and expand the tax net.
He also called for reforms to reduce non-performing loans and improve SME financing, and proposed an Economic Reform Acceleration Unit to monitor the implementation of reforms.
Mahbubur Rahman, president of the International Chamber of Commerce-Bangladesh, said high interest rates, rising production and import costs, exchange-rate volatility and uncertainty over energy supplies have increased the cost of doing business.
He called for a stable and predictable policy environment to restore private-sector confidence and boost investment, industrialisation, exports and employment.
Policy Research Institute Chairman Zaidi Sattar said high import duties were pushing up domestic prices and inflation, calling for a more strategic approach to export and market diversification ahead of Bangladesh's graduation from the least developed country category.
CPD Distinguished Fellow Mustafizur Rahman said Bangladesh needed a "revolution" in tax collection to implement the Annual Development Programme, warning that the government was unlikely to meet its revenue target under the current system.
He also said monetary policy needed reform as its current stance was not adequately supporting the budget's objectives and was contributing to inflationary pressure.
Transcom Group CEO Seemin Rahman said several business-friendly measures had been included in the budget, but the private sector had yet to regain momentum.
She called for greater efficiency at ports and customs, saying high raw material costs were forcing industries to reduce production.
Mutual Trust Bank Managing Director and CEO Syed Mahbubur Rahman said coordination between monetary policy and the budget remained weak amid persistent inflation, calling for faster digitalisation of tax administration and greater investment in skilled human resources.
"Without ensuring access to energy and a supportive business environment, neither lower interest rates nor other incentives will be enough to attract domestic and foreign investment," he said.
Former DCCI president Rizwan Rahman called for expanding the tax base rather than increasing pressure on existing taxpayers, greater use of artificial intelligence in tax administration and dedicated economic zones for SMEs.
Responding to the concerns, Minister Khosru said the government was working to improve the business environment and remove barriers to investment.
He said the government had announced a Tk60,000 crore incentive package and eligible businesses would receive financing without political interference.
The government is also working to strengthen the capital market and introduce alternative financing instruments, including different types of bonds, he said.
Khosru stressed that increasing the tax-to-GDP ratio was essential for implementing government economic programmes and said there was "no alternative to automation" in tax collection.
He also acknowledged that deregulation would be difficult but said the government remained committed to it and would not provide special treatment to anyone.
