The New Nation - Internet Edition

Staff Reporter

After raising tariff of Compressed Natural Gas (CNG), the Government is going to increase prices of fuel oil to adjust it with the soaring prices of petroleum in the global market.

Finance Adviser Dr Mirza Azizul Islam yesterday put a broad hint about it saying, "Sometimes, somewhere we've to go for price adjustment. It cannot be continued for long." He also gave a good news that people will experience no tax hike but relaxation in some cases in the upcoming budget.

"Fuel prices will surely be increased. We have no alternative," he told reporters on his arrival at Zia International Airport, after attending a meeting of United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) in Bangkok and the Asian Development Bank board meeting in Madrid.

He, however, said any final decision would come after consultation with the top brass of the interim administration.

"The import cost has increased manifold. Maintaining balance of payment has turned out to be difficult. Things cannot go this way. It is inevitable that we have no way except increasing the price of oil," the Adviser said.

Meanwhile, oil jumped to a record $126 a barrel yesterday on the international market, extending gains to more than 11 per cent since the start of the month on fuel supply concerns and a rush of speculator buying. US crude settled up $2.27 at $125.96 a barrel before rising to a record $126.25 in late post-settlement trade. London Brent crude gained $2.56 to settle at $125.40 a barrel, off the earlier high of $125.90.

Mirza Aziz said the international prices of oil have soared so high that the subsidy on fuel oil would increase even after adjustment of the prices in the domestic market.

The Finance Adviser, however, said that the price adjustment should be done in a manner that would relatively affect only a small portion of the people. "Some social protection measures have to be taken to save the low-income group of people from the impact."

The amount of subsidy on fuel for irrigation would be increased in the next budget, he said.

Replying to another question, the Finance Adviser said the tax policy would be made as business-friendly as possible in the next budget and there would be no hike in tax rates. "We're examining how the tax policy could be made business-friendly," he added.

"The tax coverage is going to be widened in the budget for 2008-09, but the tax rates would not be increased. Instead, the tax rates may be reduced in few cases."

He said the Government was thinking of expanding the social safety net emphasising elderly allowance, allowance for freedom fighters, widows and destitute people.

"More people will be brought under the social safety umbrella," Mirza Aziz said.

Turning to the fuel price issue, the Finance Adviser said he also pointed out the possibility of social discontent over the fuel oil price at the UNESCAP annual meeting in Bangkok on April 28.

He called for initiatives by the international community to help Bangladesh face the increased pressure on the budget due to the price hike of fuel oil, food and fertiliser as well as increased import costs.

He urged the oil-surplus countries to provide the net oil-importing countries like Bangladesh financial assistance from the extra-profit they made of the increased oil prices.

"The climate change has caused the food crisis where Bangladesh has no contribution, but has become the worst victim of it," he said, urging the developed countries to take initiatives to offset the losses.

The Adviser said the ADB has already undertaken some positive steps in this regard and pledged for an additional assistance of US$ 40 million to Bangladesh in the wake of increased food prices.