Bangladesh has incurred nearly $4.1 billion in additional energy costs and continues to spend millions of dollars every month to shield its citizens from a global fuel shock, even as economic growth decelerates and inflation climbs, according to a new report. The findings underscore the mounting fiscal pressure on Dhaka as it navigates one of the most difficult external environments in recent memory.

Scale of the Energy Crisis

Bangladesh imported roughly 65 per cent of its energy requirements last year, leaving it acutely exposed when global oil and gas prices spiked following US military strikes on Iran in March. The consequences have been visible on the ground: widespread power cuts, long queues at petrol stations, and sharply higher costs for transport and food that have squeezed household budgets across the country.

New Government Inherits a Structural Problem

Prime Minister Tarique Rahman, who assumed office on 17 February after campaigning on a platform of economic and social reform, was confronted almost immediately by the external shock. An adviser to Rahman, Rashed Al Mahmud Titumir, acknowledged that the impact of the energy shock should have been partially cushioned by solar power, but said that 'the previous government didn't build any sustainable energy security infrastructure' — pointing to deep-rooted vulnerabilities that predate the current administration.

Multilateral Support and IMF Projections

International lenders have stepped in to ease the burden. The World Bank and the Asian Development Bank (ADB) have provided hundreds of millions of dollars in loans, while the International Monetary Fund (IMF) has disbursed nearly $3.6 billion to Bangladesh since 2023. Nevertheless, the IMF this week trimmed its growth forecast for Bangladesh for 2027 to 3.2 per cent, down from 3.6 per cent projected for the current year — placing the country behind Cambodia and Nepal among developing Asian economies. The Fund also forecast that inflation will rise to 10.9 per cent in 2027, up from 8.7 per cent this year.

Dhaka Pushes Back on IMF Outlook

Bangladesh's government has contested the IMF's projections, maintaining that they 'had not fully taken into account the impact of its structural reforms of financial institutions, indebted businesses and a hollowed-out welfare state.' Titumir, for his part, expressed optimism that future growth would be driven by foreign direct investment into new manufacturing sectors — including electronics and toys — along with infrastructure development, solar power expansion, deep-sea ports, and the creation of new special economic zones.

What Lies Ahead

The trajectory of Bangladesh's economy in the near term will depend heavily on global energy price movements and the pace at which the Rahman administration can implement structural reforms and attract foreign investment. With multilateral disbursements already committed and the reform agenda publicly stated, the coming months will test whether Dhaka can convert crisis-driven spending into a credible long-term recovery.