Major economic impact 'unlikely in short term'

Any significant impact of the ongoing Middle East war on Bangladesh's economy is unlikely in shorter term, a finance division assessment concludes, but predicts a bite if the conflict prolongs.

The finance division also does not see any possibility of big shortages of fuel oils and gas in the country during the same period, sources have said.

Such is the assessment done on instruction from the cabinet division, they said, and already submitted to Finance and Planning Minister Amir Khasru Mahmud Chowdhury.

The report may be submitted to the next cabinet meeting of the newly formed government to decide about next course of actions through contingency planning.

Finance division officials have said the war broke out only 11 days back and making an accurate assessment based on data of such a few days is "very complicated".

They noted that since Bangladesh has long-term agreements with top energy suppliers and there is visible sign that the war may not last longer, possibility is very little that the conflict will have any significant impact on the economy.

However, they think, if the war situation lingers and the Strait of Hormuz, a channel between the Persian Gulf and the Gulf of Oman, the only sea passage from the Persian Gulf to the open ocean, continues to remain shut, the economy may start facing the heat.

The Strait of Hormuz is one of the world's most strategically important choke points through which some 20 per cent of the liquefied natural gas (LNG) and 25 per cent of seaborne oil trade pass, which Iran declared closed since the war broke out, halting the carriage of LNG and fuel oils.

"Until now, we have not received any additional fund demand from the energy ministry," a senior finance official told The Financial Express Wednesday.

He said the ministry got required energy subsidy through budgetary allocation. "It will seek additional funds only after the previously allocated funds wane due to buying energy at higher prices."

Another senior finance division official said a good number of LNG-and fuel-oil-carrying ships have reached Bangladesh waters in the past several days and some are on the way. The government is also buying the same on an urgent basis to meet the requirements.

He says apart from the traditional sources, the government is trying to secure oil and gas from alternative markets to meet the demand.

"I don't see any fuel crisis in the coming weeks."

The official notes that unless any energy shortage is created, there is hardly any possibility that crisis will be created in other sectors.

"We have already got adequate fertilisers in the warehouses for the next farming season," says the official.

syful-islam@outlook.com