As the war in the Middle East prolongs, affecting Bangladesh's already weakened economic base, a number of development partners have come up with proposals to provide higher volumes of budget support credit to help offset the impacts of the conflict.
Finance Division officials say there is no sign of the war ending very soon; thus, Bangladesh's economy may suffer badly if the conflict lingers for another month or two.
They apprehend that remittance inflows may decline significantly if Bangladeshi expatriate workers in the Middle East begin losing jobs due to the fallout of the war, which would put pressure on foreign exchange reserves.
Moreover, energy subsidies have already reached an all-time high, as last week the finance ministry agreed to disburse an additional Tk 240 billion to support the purchase of liquefied natural gas (LNG) and fuel oil at higher prices.
The procurement of LNG at nearly double prices and oil at elevated rates is already putting pressure on the economy, Finance Division officials said.
In recent days, Finance Division officials have held discussions with several development partners, who indicated that Bangladesh could seek higher amounts of budget support credit, if needed, to cope with war-related financial pressures.
Sources said the officials concerned have already sought permission from the finance minister to pursue additional budget support credit from development partners.
"We have received offers from a number of development partners for additional budget support credit to cope with the spending pressure. We are working on it," said a senior Finance Division official, preferring not to be named.
He said that in the current fiscal year, Finance Division officials have already completed discussions on several budget support credits, which have received initial approval from the boards of the respective development partners.
There is no scope to revise the amount of credit in those arrangements.
However, additional support may be sought for proposals currently at the mid-level discussion or appraisal stage, the official added.
He, however, declined to disclose the names of the development partners that have expressed willingness to provide additional support.
Prime Minister's Finance and Planning Adviser Dr Rashed Al Mahmud Titumir said this week that, if necessary, approaches would be made to development partners such as the International Monetary Fund (IMF) and the World Bank to secure additional financial support for ensuring energy security in the country.
In fiscal year 2024-25, Bangladesh received around $3.0 billion as budget support from development partners.
However, the interim government led by Prof Muhammad Yunus had decided not to seek budget support in fiscal year 2025-26.
But as the war has begun to shake the economy, the new government, led by Prime Minister Tarique Rahman, has started the process of seeking budget support credit -- if available -- in higher amounts than in the past.
syful-islam@outlook.com