STAR BUSINESS REPORT

Energy-related decisions will be critical for the country’s macroeconomic management, according to economist Debapriya Bhattacharya, who called for careful assessment of policy options and coordination with the finance ministry.

Without such coordination, any decision taken solely by the energy ministry could put the economy at risk, he said.

Speaking at a media briefing organised by the Centre for Policy Dialogue (CPD) in Dhaka yesterday, Bhattacharya, convener of the Citizen’s Platform for SDGs, Bangladesh, talked about the challenges facing the first budget of the new government.

“If the government wants to take any decision regarding fuel and energy, it should not take it without analysing the impact on the macroeconomy,” he said.

“You will have to first understand the fiscal space of the country within the existing macroeconomic situation,” said the economist.

The government must also consider the balance of payments. “How much you can import by spending foreign currency, and how much you can borrow to import high-priced fuel, needs to be analysed.”

Without this assessment, any unilateral decision by the energy ministry could jeopardise the economy. “So, coordination is necessary, but I don’t see any such coordination at this moment.”

Bhattacharya said the government needs to evaluate fuel taxes and excise duties carefully, and where the rates could be reduced.

“How much am I concerned about the diesel price hike? I have no such concern regarding the price hike of octane,” he said, adding that fuel price adjustments should vary across types and that the government must focus on sourcing fuel at lower costs.

He also noted that international diplomacy could affect fuel supply, but said, “An elected government will make a proper trade relation in the global arena, and it is normal. We cannot run the country’s trade relations by taking heed of other countries.”

However, the fuel issue remains closely linked to geopolitical tensions. “It will depend on how long the war continues.”