The federal government has given in to the International Monetary Fund (IMF) and proposed a significant price hike of up to Rs30 per litre in petrol and fuel.
Finance Minister Miftah Ismail announced today during a press conference that the government has decided to raise the price of petroleum products.
The finance minister announced Rs. 30 per litre increase in fuel, diesel, light diesel, and kerosene oil prices.
Petrol will now cost Rs179.86 per litre, high-speed diesel (HSD) Rs174.15, kerosene oil Rs155.56, and light diesel Rs148.31 rupees, following the recent hike.
Miftah Ismail stated that the government is already providing Rs. 56 per litre subsidy and has already incurred an Rs. 55 billion financial loss in just 15 days.
He claimed that in light of the current economic crisis, Prime Minister Shehbaz Sharif made a difficult decision. He went on to say that the government is putting the country’s interests first, while also criticising the previous administration’s actions for the high inflation rate.
Ismail said that the petrol and diesel prices were set by the previous government, which was run by Pakistan Tehreek-e-Insaf (PTI). “Putting the nation’s financial burden on our shoulders is a difficult decision for us to make, but it is unavoidable.” Petrol subsidies are already benefiting the wealthy and the poor.”
He underlined that Pakistan could not obtain the IMF loan unless fuel prices were raised. The finance minister stated that the government will wait for a decline in petroleum product prices on the world market, but that a loan from the IMF was required at this time.
On Wednesday, it was announced that the Pakistani government and the International Monetary Fund had reached an agreement, and the IMF had conditioned Pakistan’s $3 billion economic aid programme to the withdrawal of fuel subsidies.
Despite a week of deliberations in Doha, Qatar, from May 18 to 25, the Pakistani team failed to persuade the IMF, as both sides were unable to reach a staff-level agreement.
According to sources, the IMF has refused to lend to Pakistan until the country eliminates all fuel price subsidies. The reduction of fuel price subsidies has been linked to the $3 billion economic assistance scheme for the Pakistani government.
Pakistan is hoping for a $3 billion loan from the IMF. That sum would be added to the country’s foreign-exchange reserves, which currently stand at $10.2 billion, barely enough to cover two months’ worth of imports. This year, the government faces a $45 billion trade deficit.
The government had banked its hopes on the program’s reinstatement, which was intended to bring stability to the financial markets, the rapidly falling Pakistani rupee, and the rapidly depleting foreign exchange reserves.