Fuel subsidies should be phased out
Centre for Policy Dialogue (CPD) Executive Director Fahmida Khatun has urged the government to gradually withdraw universal fuel subsidies and instead direct support towards priority sectors such as agriculture, irrigation and public transport.
Speaking at a debate competition organised by Debate for Democracy in Dhaka on Saturday, she said the government no longer had the fiscal capacity to maintain broad-based fuel subsidies.
She argued that such subsidies were neither efficient nor equitable, as higher-income groups also benefit from support that should be targeted at those most in need.
Fahmida stressed the importance of greater transparency in fuel pricing.
Referring to the government’s monthly fuel price adjustments introduced in line with recommendations from the International Monetary Fund, she said authorities often failed to pass on the benefits of falling international prices to consumers, instead retaining higher margins.
She also raised concerns over governance in the energy sector and called for strict implementation of a transparent pricing formula to reduce irregularities and improve accountability.
Alongside fuel pricing reforms, she urged greater investment in energy infrastructure, expansion of fuel storage capacity and stronger efforts to boost domestic gas exploration.
“Bangladesh has the potential to increase gas production through additional drilling, based on existing studies,” she said.
Fahmida also warned that the national budget should not be treated merely as a routine financial statement, but rather as a strategic tool for stabilising a fragile economy.
She said budget measures must focus on strengthening domestic economic foundations at a time of continued global uncertainty.
Highlighting key macroeconomic concerns, she pointed to inadequate foreign exchange reserves, slowing export growth and weak investment levels.
Private investment, she noted, has fallen to around 22 per cent of GDP, while foreign direct investment remains low, contributing to stagnant job creation.
In her view, remittance inflows alone are not enough to stabilise the country’s external balance.
To address these challenges, she called for improved investment conditions, stronger revenue mobilisation and greater transparency in social safety net programmes.
Meanwhile, Hassan Ahamed Chowdhury Kiron, chairman of Debate for Democracy, said rising global commodity prices and higher fuel costs driven by international conflicts had significantly increased the cost of living.
He proposed temporary VAT and tax reductions on essential goods, wider subsidised food distribution through the Trading Corporation of Bangladesh, and the continuation of support programmes such as Family Cards and Farmers’ Cards to protect low-income and vulnerable groups.
