Finance ministry weighs impacts of ME war on economy

Officials at the ministry of finance have started assessing the possible impacts of the ongoing war in the Middle East on Bangladesh's economy and ways to manage the potential financial burden arising from it, sources said.
The ministry launched the study on Thursday following instructions from the government high-ups.
Officials said the ministry has been asked to submit a report before the next cabinet meeting, where the issue will be discussed to decide the next course of action.
On February 28, Israel and the United States launched airstrikes on Iran, and the attacks have continued for six days as of Thursday. Iran has retaliated by targeting Israeli positions and US military bases in several Middle Eastern countries, spreading the conflict across the Gulf region and leaving hundreds dead.
Enraged by US-Israel joint attacks, Iran has closed the Strait of Hormuz, a narrow waterway between the Persian Gulf and the Gulf of Oman that serves as the only sea route from the Persian Gulf to the open ocean. It is one of the world's most strategically important chokepoints.
As a result, the movement of ships -- particularly those carrying gas and petroleum products from Gulf nations -- has been completely suspended. Moreover, several major liquefied natural gas (LNG) producers, including Qatar, have halted LNG production and supply following missile attacks launched by Iran, further intensifying concerns over global energy supplies.
Bangladesh is heavily dependent on Gulf countries for imports of liquefied natural gas (LNG) and petroleum products to meet its growing energy demand amid shortage of domestic gas production.
Due to the Middle East crisis, prices of both LNG and crude oil have gone up significantly, raising concerns among import-dependent countries.
Data shows that LNG prices in Asian markets have surged to a three-year high following a production halt in Qatar, while oil prices rose by more than 1.0 per cent in early Asian trading on Thursday.
"The major concern is the possible impact of rising oil and gas prices as the Middle East war nears a week," said a senior official of the finance division involved in the study.
He said there are concerns that petroleum fuels and gas could become scarce due to the war, and even if available, buyers may have to pay higher prices.
"This will cause a significant fiscal burden for the country, especially if the war lingers," the official added.
According to officials, the cabinet division has asked the finance division to examine how much additional funding may be required and identify possible sources of funds to meet the demand.
The report will outline the potential economic impacts of the war and recommend measures to successfully manage the situation, they said.
The finance division has already asked the energy division officials to provide statistics on the demand for fuel oil and LNG as well as the current supply situation.
The Power Division has also been asked to provide data on the power generation capacity of coal-fired plants, the present coal stock and the demand pattern for coal in order to assess alternative options if LNG and fuel oil supply dries up.
syful-islam@outlook.com