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Bangladesh to hike power tariff again in June to meet IMF conditions

26 Apr '23

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Another electricity tariff hike would be recommended by June in Bangladesh to contain budget subsidies for natural gas and electricity to 0.9 per cent of the GDP, finance ministry officials told IMF.
The tariff was raised thrice this year, by 5 per cent each time.
Rationalisation of subsidies is one of the stipulations of the $4.7-billion IMF loan project.

Another electricity tariff hike would be recommended by June in Bangladesh to contain budget subsidies for natural gas and electricity to 0.9 per cent of the gross domestic product (GDP), finance ministry officials recently told visiting International Monetary Fund (IMF) staff. The tariff was raised thrice this year, by 5 per cent each time.

Electricity subsidy was topped up by Tk 6,000 crore to Tk 23,000 crore in the revised budget.

The visiting IMF staff mission, which is in Dhaka till May 2, held a separate meeting with the Bangladesh Bank, according to media reports from the country.

Rationalisation of subsidies is one of the stipulations of the $4.7-billion IMF loan programme, and the government has committed to adjusting electricity prices further to reduce the subsidy component.

Tk 81,000 crore was earmarked for subsidy expenses in the original budget for this fiscal. In the revised budget, another Tk 21,000 crore was made available.

The ministry officials also informed the IMF mission that it would be tough to meet June's target for net international reserves (NIR), one of the three mandatory conditions for the release of the next tranche of the loan. The IMF stipulated a minimum NIR of $24.46 billion on June 30.

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