ASIFUR RAHMAN and SUKANTA HALDER

A sharp increase in fuel prices -- one that will ripple through every layer of the economy -- signals that the government has reached the limits of its fiscal endurance.

By raising the prices of diesel, octane, and petrol by Tk 15-Tk 20 per litre, the government has effectively conceded that the subsidy burden is no longer sustainable.

While economists have welcomed the move as a necessary correction, it shifts the economic strain directly onto a population already worn down by prolonged inflation, underscoring the country’s shrinking capacity to shield consumers from global volatility.

Power, Energy and Mineral Resources Minister Iqbal Hassan Mahmood Tuku described the situation as “wartime”, noting that global markets have already adjusted.

Speaking to reporters at the Secretariat yesterday, he said Bangladesh had been selling fuel below import cost to keep prices tolerable.

“Fuel must be purchased with foreign currency. By increasing prices slightly, we are trying to keep the situation at a tolerable level,” he said, adding that war inevitably carries global repercussions.

Prof Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue, said the adjustment reflects mounting fiscal pressures and limited policy options.

He warned that the hike will erode purchasing power after prolonged inflation, while raising costs across transport, industry, and trade.

Fuel imports will continue to strain reserves, requiring careful management and external financing, he told The Daily Star.

Zahid Hussain, former lead economist at World Bank’s Dhaka office, also supported the move, saying subsidies drained public funds and disproportionately benefited wealthier groups.

Failing to adjust prices would force the government to finance Zahid

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