The visiting mission of the International Monetary Fund has called for a pricing formula for fuel, fertilizer, electricity and gas by next fiscal year and cut back on subsidy spending to efficient budget financing.
The 10-member mission was in Dhaka on a 15-day visit to decide on the conditions for the $4.5 billion loan, and held a meeting with finance division recently.
For long, the government has been subsidizing the prices of fuel, fertilizer, electricity and gas -- an unsustainable practice that benefits both the poor and wealthy alike.
Thanks to the Ukraine war, the prices of fuel, fertilizer and gas shot up, prompting the government to hike their prices at home, in what felt like a jolt to the poor and the fixed-income earners.
Adopting a pricing mechanism that is tagged with the prices in the global market then would prevent such price shocks and help the government accommodate additional social spending.
The Washington-based multilateral lender called for a timebound plan on the pricing mechanism and pushed for its implementation by the next fiscal year.
In response, the ministry officials said they are working on it but it is unlikely that the government would agree to introduce the formula before 2026.
"This is a transition period and hence not the right time for such moves," said an official familiar with the discussions.
