Govt seeks urgent $3b loan

Due to the situation created by the war in the Middle East, the prices of fuel oil, gas, and fertilizer in the global market have increased.

Importing these goods at higher prices will require 3 billion US dollars in four months. Additionally, subsidies will require Tk 385.42 billion.

The government is seeking a loan of 3 billion USD (approximately Tk 370 billion) to manage this pressure.

The government aims to secure this loan from development partners as budget support for the period from March to June.

The macroeconomic wing of the finance division has issued a letter to the Economic Relations Division (ERD) to discuss the possibility of obtaining the loan.

A position paper was sent with the letter, presenting data on the economic pressure on Bangladesh due to the war and the need for urgent loan support. The paper outlines three roles for the loan: first, to help maintain Bangladesh's foreign currency reserves and ensure imports of fuel, fertilizer, and food; second, to aid specific groups for a certain period; and third, to be used to curb the abnormal rises of fuel oil, gas, fertilizer prices, etc., in the country.

The finance division stated in the position paper that Bangladesh's balance of foreign transactions is under pressure due to the war in the Middle East. This loan support is needed to meet urgent requirements and maintain economic stability.

No comments were available from top officials of the finance division and ERD on the matter, as Finance Minister Amir Khasru Mahmud Chowdhury and 14 other ministry and department officials are attending the Spring Meetings of the World Bank and the International Monetary Fund (IMF) in Washington, USA, starting 13 April. Bangladesh is expected to request additional loans from the IMF during this meeting.

Finance Minister Amir Khasru Mahmud Chowdhury told Prothom Alo on 31 March that he would present the economic situation at the World Bank and IMF Spring Meetings.

If the war disrupts energy and food supplies and increases prices in the global market, Bangladesh faces difficulties. Following the start of the Russia-Ukraine war in February 2022, the prices of essential commodities, including fuel, surged in the global market.

As Bangladesh imported at higher prices, its foreign currency reserves rapidly depleted, dropping from 48 billion USD to below 20 billion USD. At the same time, the exchange rate for the dollar, which was Tk 86, exceeded Tk 120. Consequently, inflation rose sharply. The then Awami League government's mismanagement was blamed for this.

The pressure of increased fuel oil and fertilizer prices was passed on to the general population by the then-government. The prices of electricity, gas, fuel oil, and fertilizer were raised multiple times, but wages did not increase in line with inflation.

This economic situation drove a vast number of people below the poverty line. In a study published in August last year, the independent research organisation Power and Participation Research Centre (PPRC) reported that the poverty rate in the country rose to nearly 28 per cent over three years, from 18.7 per cent in 2022.

Economist Ahsan H Mansur became the Governor of Bangladesh Bank after the fall of the Awami League government on 5 August 2024.

He took various steps, including raising interest rates on loans, to stabilise the foreign exchange market. As a result, foreign currency reserves began to increase. In February last, the total reserves surpassed 35 billion USD.

The BNP formed the government on 18 February, after winning the 13th national parliamentary election. Ten days later, on 28 February, the United States and Israel attacked Iran. In retaliation, Iran closed the Strait of Hormuz, a crucial oil supply route in the world.

A ceasefire began on 8 April, Bangladesh time. However, the Strait of Hormuz has not yet reopened, and uncertainty remains. Even if the ceasefire ends, oil prices are not expected to return to previous levels soon, owing to significant damage to energy facilities during the war. Faced with such a situation, the new government began searching for emergency loans.

According to Bangladesh Bank data, the country imported goods worth 68.35 billion USD in the fiscal year 2024–25. Of this, the import cost of petroleum products (i.e., fuel) was 5.14 billion USD, and fertilizer imports cost another 2.62 billion USD.

According to a BSS report, nearly 3.88 billion USD was spent on importing liquefied natural gas (LNG) in 2025.

Whenever fuel prices rise, Bangladesh's import costs increase. The finance division mentioned in the position paper that, following the start of the war, diesel prices rose by 250 per cent, LNG by 100 per cent, and fertilizer prices by nearly 50 per cent in the international market. As a result, import costs have rapidly increased. The finance division projected that where 3.01 billion USD was spent on fuel and fertilizer imports from March to June 2025, this could rise to 5.58 billion USD during the same period this year.

The finance division also presented the situation of foreign currency reserves in the position paper. It stated that although foreign currency reserves exceeded 30 billion USD in February, they fell to around 29 billion USD in March. Note that this calculation uses the IMF-recommended method, known as BP 6.

The position paper by the finance division mentioned that Tk 385.42 billion in additional subsidies for fuel oil, gas, electricity, and fertilizer would be required from March to June (2026). In total, subsidies would amount to Tk 975.42 billion, against a budget allocation of Tk 590 billion.

Despite global price hikes, the government did not increase fuel oil prices domestically in April. However, a high-level cabinet committee led by the finance minister was formed on 9 April to adjust electricity prices.

ERD sources said that communication has begun with various organisations, including the World Bank, IMF, Asian Development Bank (ADB), and Asian Infrastructure Investment Bank, for emergency loans.

Previously, budget support was taken, but development partners set various conditions for reforms. While some were implemented, others were not, raising questions about the progress of reforms when seeking new loan support.

On the other hand, organisations like the IMF oppose providing subsidies for sectors like fuel oil, gas, and electricity for everyone. In this case, the finance division mentioned in the position paper that the subsidies would be short-term and specifically targeted. Measures would also be taken to increase revenue.

Meanwhile, Bangladesh's foreign debt is rising. As of December 2025, the total foreign debt stood at 113.51 billion or 11,351 crore USD, equivalent to Tk 13,961.73 billion.

Former World Bank lead economist Zahid Hussain told Prothom Alo that in the current global situation, many countries are seeking budget support from development partners. Therefore, Bangladesh's initiative is not unusual. However, he believes that development partners will want to know what policy measures the government has taken and why fuel prices were not adjusted domestically despite price hikes in the international market.