Asif Showkat Kallol: The government is in a double whammy. It needs more money to pay the hefty subsidy bills, particularly for fertiliser and energy. On the other hand, it thinks consumers will be more pinched as they are already hit hard by rising prices of essential commodities.
Those who oppose price hike of fertiliser and energy reasoned people will be in further stress before the Ramadan and Eid festival.
“The Prime Minister’s Office (PMO) does not want to increase the prices of urea fertilser, gas, water and electricity before the Eid festival,” said a senior finance ministry official.
He said the revised budget and the subsequent national budget for the next fiscal could not be completed unless the government finds a way out about two-and-a-half-hundred lakh crore taka worth of subsidies and incentives.
“We need to immediately address the issues within February and March,” he told Business Insider Bangladesh, requesting anonymity.
Sources said the PMO, however, last week directed not to hike prices of three items: fertiliser, gas and electricity before the Eid festival is celebrated.
“Bangladesh consumers began 2022 with some big price surges in everyday purchases due to diesel price hike in November 2021,” said economist Dr Reza Kibra, a former IMF official.
Further price rise of essentials in the coming months will compound sufferings of the people, he added.
He said the major problem that the government is confronting with is the problem of ceasing corruption sectors that are trimming subsidies.
Former caretaker government’s adviser, Dr AB Mirza Azizul Islam said it is not appropriate to switch subsidy burden on to the people suddenly.
If the government wants to make upward adjustment to utility prices, they should do it once.
The finance ministry says it is not possible to provide Tk 28,000 crore in fertiliser subsidy in fiscal 2021-22 as per agriculture ministry demand.
The outlay of subsidy for the farm sector ultimately stands at Tk 10,550 crore as against the budget allocation of Tk 9,500 crore. It would be very difficult if the subsidy fund expands in the revised budget, officials concerned said.
In another development, the energy and mineral resources ministry has asked for Tk 32,000 in Liquefied Natural Gas (LNG) subsidy to procure it from Singapore.
Therefore, they are looking for an increase in gas prices in a couple of months, officials said.
They said they are afraid that the incentive and subsidy could nearly double if the prices of urea fertiliser, electricity and gas rise in the local market.
The government has termed the price hike of the fertiliser a two-way trouble.
Agriculture Minister Dr Muhammad Abdur Razzaque believes that it is not the right time to increase the prices of local fertilisers.
