Govt to seek $2 billion from multilateral lenders for BoP support

Bangladesh will seek an additional $2 billion from multilateral partners, including the International Monetary Fund (IMF), to manage pressure on external payments amid increased emergency energy purchases caused by the US-Israel war on Iran, said the central bank governor today.

The disclosure comes as oil prices soar amid Iran’s effective closure of the Strait of Hormuz, a key chokepoint handling one-fifth of global oil trade.

Brent crude futures, the benchmark for international oil trade, closed 4.2 percent higher at $112.57 a barrel on Friday (March 27), up from $72.48 a barrel just a month ago, the day before the US-Israel war on Iran began.

Bangladesh meets 95 percent of its oil and 30 percent of its gas needs through imports.

Middle Eastern countries such as Saudi Arabia and Qatar, which use the Strait of Hormuz to export energy and fertiliser, are two key sources for the country. Bangladesh spends more than $10 billion a year importing petroleum and energy products.

“We are providing the government with ideas about various potential impacts of oil price increases,” said Bangladesh Bank (BB) Governor Md Mostaqur Rahman at a view-exchange meeting with senior business journalists at his office.

Read more

Govt approves emergency diesel import

Based on different scenarios, the BB is analysing the possible impact on foreign exchange reserves. For example, if the price of oil is $210, the impact will be one type; if it is $150, it will be different; and if it is $100, the result will be different again.

“We are informing the government of these calculations,” he said, adding that discussions are underway regarding obtaining about $2 billion in balance of payment (BOP) support.

Talks are ongoing with various international partners on this matter. “The matter of obtaining additional assistance from the IMF is also under consideration, although no formal discussions have taken place yet,” Rahman added.

He said the possibility of extra financing from the Asian Development Bank and other sources is also being explored.

Rahman, appointed last month after the new government took office, said Bangladesh needs to ensure energy security and cut costs, and that the government is trying.

“The situation is changing rapidly -- sometimes there is talk of a ceasefire, and then again, fears of new conflict arise. Therefore, efforts are being made to take necessary decisions by constantly monitoring the situation and coordinating with all relevant parties.

“Our goal is only one: to keep the economy relatively stable even in this uncertain situation,” he said.

He added that in the current situation, the central bank’s policy stance is extremely important. “Especially on the exchange rate issue, we have to remain cautious. The BB is also not going to reduce the policy rate.”