Eminent economist Debapriya Bhattacharya has warned that Bangladesh’s recent reciprocal trade agreement with the United States could restrict the country’s energy sourcing options, adding strain to an already pressured economy ahead of the new budget.

Speaking at a Centre for Policy Dialogue (CPD) briefing on Tuesday, Debapriya said the deal’s clauses limit Bangladesh’s ability to trade with countries under US sanctions and classify certain economies as “non-market,” complicating energy imports from nations like Russia and China.

“These legal restrictions make a formal US waiver necessary for accessing cheaper Russian oil, directly limiting multilateral trade flexibility during the crisis,” he noted. Bangladesh is seeking to import about 600,000 tonnes of Russian oil and has requested clearance from Washington.

Debapriya highlighted “triple macroeconomic pressures”: rising power subsidies, higher energy import bills, and increasing demand for US dollars to settle external payments. He warned that surging global energy prices could raise annual energy costs by $4.8 billion, or roughly 1.1% of GDP, potentially worsening external account deficits.

He added that higher fuel costs could accelerate inflation, while increased dollar demand may lead to further depreciation of the taka. Regional instability could also affect remittances, especially from Gulf countries, which account for nearly half of total inflows.

Regarding the upcoming national budget, Debapriya said the government faces a “hard budget constraint” due to structural weaknesses, incomplete reforms, and growing economic pressures. Key challenges include lingering structural issues, the need to balance electoral promises with reform, limited fiscal space from weak revenue collection, and ongoing external sector imbalances.

He stressed that disciplined fiscal management and strategic prioritization are essential amid rising global energy prices and geopolitical uncertainties.