Pakistan raises fuel prices by 20% ending subsidies
Pakistan’s government has raised the prices of petroleum products by 20% ending the months-old freeze on fuel prices to revive International Monetary Fund (IMF) economic bailout package.
Finance Minister Miftah Ismail announced that the federal government has decided to raise the prices of petroleum products by Rs30 per liter from May 27.
New prices after the hike
- Petrol: Rs179.86
- Diesel: Rs174.15
- Kerosene oil: Rs155.56
- Light diesel: Rs148.31
Decision taken to revive IMF program, support economy
Miftah Ismail said the decision of such a price hike was tough for the new government but it had become inevitable to revive the economy. Now the exchange rate would improve, markets would stabilize, the economy would balance out and investors would take the decision positively, he claimed.
The “government is committed to reducing the budget deficit in the fiscal year 2023”, he said, adding that the government was also committed to reviving the IMF program and putting Pakistan back on a sustainable growth path.
The price hike was the first step toward convincing the IMF to release the next tranche at the earliest, reports suggest.
Reuters reported that the IMF and Islamabad had reached a deal to release over $900 million in funds, once Pakistan removed the fuel subsidies and hiked prices.
Pakistan entered the $6 billion 39-month funding program with the IMF in July 2019 and about half of the funds out of the $6 billion deal are yet to be released.
IMF mission led by Nathan Porter held both in-person and virtual discussions in Doha, Qatar with the Pakistani authorities during May 18-25 on policies to secure macroeconomic stability and support sustainable growth in Pakistan.
IMF team “emphasized the urgency of concrete policy actions, including in the context of removing fuel and energy subsidies and the FY2023 budget, to achieve program objectives.”