Bangladesh seeks extended oil credit from Saudi Arabia

Cash-strapped Bangladesh asked Saudi Arabia for extended credit on oil supplies, Dhaka’s foreign ministry said, as the South Asian nation grapples with dwindling foreign exchange reserves.

Saudi Arabia supplies more than half of Bangladesh’s crude imports, but Bangladesh has been hit hard by the global surge in energy and food prices following Russia’s invasion of Ukraine.

At the same time the taka has depreciated about 25 percent against the US dollar, driving up costs for petrol distributors and power utilities that have rippled across the rest of the economy.

Nationwide blackouts of up to 13 hours a day hit the electricity grid last year and the government offered food relief for households unable to afford rice and other staples.

In a meeting Wednesday with Riyadh’s ambassador, foreign minister A.K. Abdul Momen asked Saudi Arabia to consider supplying crude and refined oil “on a deferred payment basis”, the foreign ministry said in a statement.

The economic strains come with a general election due by next January.

The opposition Bangladesh Nationalist Party has blamed the government for the crisis, accusing it of squandering cash on multibillion-dollar vanity projects.

It has organized a series of rallies demanding Prime Minister Sheikh Hasina’s resignation and an early poll under a neutral administration.

Authorities hiked retail electricity prices by five percent Tuesday, the second such increase in three weeks, while gas prices for generators were raised by an eye-watering 178 percent last month.

On Monday, the International Monetary Fund signed off on a $4.7 billion support package for Bangladesh.

The South Asian country’s foreign exchange reserves have dropped from $46 billion in January last year to $32 billion at the end of last month.

Bangladesh’s official inflation rate is around 8.7 percent but independent economists say the true figure is substantially higher.