Us-israel war on iran: Seven-minister committee to shield shocks

The government has formed a high-powered cabinet committee to draw up a crisis management plan, aiming to safeguard economic stability amid the ongoing US-Israel war on Iran, which shows no signs of easing.

Led by Finance Minister Amir Khosru Mahmud Chowdhury, the seven-member committee will also analyse the war situations in different countries and assess the potential impact on Bangladesh, according to a gazette notification issued yesterday.

The committee members include the ministers of local government, rural development and cooperatives; home affairs; power, energy, and mineral resources; commerce; expatriates’ welfare and overseas employment; and food.

The committee has been asked to submit an assessment report within 15 working days and update the Cabinet Division on the first week of every month on the progress of remedial measures to offset the impacts, Cabinet Division officials told The Daily Star.

The decision to form the committee was made at a cabinet meeting last week with Prime Minister Tarique Rahman in the chair.

The finance ministry will provide secretarial support to the committee, which may co-opt additional members if necessary and hold meetings as required, said the gazette notification.

At a meeting on Monday, it was decided that the finance ministry will collect feedback from relevant ministries and submit a draft report to the cabinet committee outlining the short-, medium- and long-term effects of the war. The committee will then work further on it, officials added.

The meeting also discussed that there would be no immediate impact on fertiliser supply and irrigation in Bangladesh, as the cultivation of Boro paddy, the country’s single largest rice crop, is already over, said meeting sources.

However, if the war prolongs, industries, electricity generation, and the transport sector could face disruptions, as these sectors rely heavily on fuel.

The meeting discussed that the power and energy ministry would take steps to ensure coal-based power plants continue operating at full capacity. “If there is any disruption in power generation from the plants, immediate measures will be taken,” a meeting source said.

To facilitate the smooth operation of coal-based power plants, the meeting underscored the need to clear arrears to the plants. A portion of the arrears has already been paid.

The meeting also reviewed the possible impact of the war on foreign exchange reserves and inflation, as well as potential austerity measures. However, given the uncertainty over how long the war may continue, officials said the government would take steps in line with how the situation evolves.

Asked about the government’s preparations in the wake of the war, Finance Minister Amir Khosru Mahmud Chowdhury said the government was moving ahead by anticipating possible impacts.

“We cannot avoid it [the war]. So, we will set our future projections taking its potential effects into account. We are aware of the risks and working accordingly,” he told reporters on Monday at a press conference.

Comparing the potential shock of the war to an earthquake, Zahid Hussain, former lead economist of the World Bank’s Dhaka office, told this newspaper that the scale of the impact would depend on both the intensity and duration of the war.

“The key question is not only the magnitude of the shock, but also how long it lasts. The longer it continues, the greater the damage,” he said.