Finance Minister Amir Khosru Mahmud Chowdhury has warned that escalating conflict between US, Israel and Iran may compel the government to provide nearly 36,000 crore taka in additional subsidies for electricity, energy, and liquefied natural gas during the final quarter of the current fiscal year.
Addressing Parliament on Friday under Rule 300 of the Rules of Procedure, the minister revealed that international prices for crude oil and LNG have surged to more than double their previous levels, creating severe fiscal pressures for the import-dependent South Asian nation.
The statement came as part of a broader assessment of economic conditions inherited from the previous administration and the new challenges posed by geopolitical instability.
Chowdhury explained that ongoing hostilities involving the United States and Israel against Iran have generated fresh uncertainty across global energy markets, disrupted supply chains, and complicated international trade flows.
He cautioned that the situation would expand the budget deficit while simultaneously straining foreign currency reserves, estimating that approximately three billion US dollars would be needed to cover increased import costs.
Despite these mounting pressures, the government has chosen not to raise domestic energy prices for the time being, prioritizing relief for ordinary citizens facing economic hardship.
Authorities have implemented several conservation measures to manage demand during this period of elevated costs. Government and autonomous offices now close at 4 pm rather than 5 pm to reduce electricity consumption.
Officials have also issued guidelines encouraging maximum use of natural daylight, regulating air conditioning temperatures, and mandating that markets and shopping centers shut by 7 pm.
Additionally, the government is working to secure energy supplies from alternative sources while ensuring subsidy funds are released promptly to maintain uninterrupted imports.
Discussions with development partners are underway to obtain supplementary budgetary assistance that could ease both fiscal constraints and balance of payments difficulties.
The finance minister used the parliamentary session to present a comprehensive comparison of economic performance across three distinct periods, contrasting the final fiscal year of the last BNP government in 2005-06 with the concluding year of the Awami League administration in 2023-24 and the interim government period of 2024-25.
He accused the previous government of driving the economy toward collapse through widespread corruption and systematic plundering of resources over sixteen years, while simultaneously undermining social institutions.
The minister credited the earlier BNP government with establishing positive economic trajectories through forward-thinking policies before those gains were reversed.
Presenting detailed macroeconomic data, Chowdhury noted that GDP growth at constant prices stood at 6.78 percent in 2005-06 with inflation at 7.17 percent. By 2023-24, growth had declined to 4.22 percent while inflation climbed to 9.73 percent, reflecting what he described as mismanagement and flawed policy choices.
The minister highlighted troubling structural imbalances in employment patterns. Although agriculture now contributes just 11.6 percent of total national value added, it employs nearly 41 percent of the workforce.
Over the past decade, agricultural employment actually increased by 4.8 percent even as the sector's economic contribution shrank by approximately four percent. Meanwhile, employment in industry and services contracted despite those sectors growing in size.
This mismatch, Chowdhury explained, has forced young workers to remain in low-productivity agricultural work rather than transitioning to higher-value employment. The result has been intensified disguised unemployment, wasted labor potential, and constrained income growth, raising concerns about jobless growth patterns.
Currency depreciation has significantly eroded purchasing power over time. The exchange rate moved from 67.2 taka per US dollar in 2005-06 to 111 taka by 2023-24, reaching 121 taka in the current fiscal year.
This near-halving of the currency's value has increased import costs, fueled inflation, and multiplied living expenses for ordinary citizens.
Monetary indicators also reflected economic stress. Broad money growth fell from 19.3 percent in 2005-06 to just 7.7 percent by 2023-24, while domestic resource growth dropped from 19.5 percent to 6.7 percent.
Private sector credit growth declined from 18.3 percent to 6.5 percent, signaling weakened investment activity and banking sector liquidity constraints.
Fiscal management showed persistent challenges with revenue collection. Despite total revenue increasing from 439 billion taka to 4,090 billion taka over the period, the tax-to-GDP ratio remained stagnant at 8.2 percent.
Government expenditure rose from 11.1 percent to 12.2 percent of GDP, pushing the deficit from 2.9 percent to 4 percent.
The minister reserved particular criticism for the explosion in interest payments, which grew from 85 billion taka to 1,147 billion taka, representing a thirteen-fold increase.
Heavy dependence on domestic borrowing crowded out credit availability for small and medium enterprises, hampering private sector development.
External sector data showed exports expanding from 10.5 billion to 40.8 billion US dollars while imports grew from 13.3 billion to 63.2 billion dollars.
However, both recorded negative growth rates by the end of the previous government's tenure. Remittances increased substantially from 4.8 billion to 23.9 billion dollars, though reserves fell to approximately 20 billion dollars due to what the minister characterized as illicit outflows.
Conditions improved somewhat under the interim administration, with remittances surging to 30.3 billion dollars and reserves strengthening to 33.2 billion dollars by December 2025.
Chowdhury addressed growing inequality, citing household survey data showing the income-based Gini coefficient worsening from 0.467 in 2005 to 0.499 in 2022.
The gap between the wealthiest and poorest households expanded dramatically, with the richest five percent earning 81 times more than the poorest five percent by 2022, compared to 35 times in 2005.
Social protection programs failed to keep pace with inflation, the minister noted, while beneficiary selection was compromised by political favoritism and corruption.
Despite apparent improvements in per capita income figures, most gains flowed to a small privileged segment of society.
Looking ahead, Chowdhury said work has begun on formulating the budget for fiscal year 2026-27, with emphasis on establishing discipline across economic sectors and addressing multiple inherited challenges.
The government aims not merely for growth but for building a sustainable, transparent, and inclusive economy, he stated, while acknowledging the high expectations citizens hold for the newly elected administration's first budget.
He appealed for public understanding of the constraints imposed by conditions left behind by previous governments.
