ISLAMABAD: Pakistan’s finance minister Miftah Ismail on Tuesday defended the federal government’s decision to raise the price of petrol, a day after the rate of petrol and light diesel oil (LDO) was increased by Rs6.72 and 43 paisa per liter, respectively.
Pakistan has announced fuel price hikes several times since May so it can meet conditions to resume receiving aid from a $6 billion package signed with the International Monetary Fund (IMF) in 2019.
On Tuesday morning, the vice president of the ruling Pakistan Muslim League-Nawaz (PML-N) said Nawaz Sharif, the head of the party, was opposed to the federal cabinet’s decision to increase petrol prices again. Asif Ali Zardari, co-chairperson of the Pakistan Peoples Party, also expressed reservation over the price hike.
Speaking to reporters, Ismail defended the increase in fuel prices.
“Yesterday’s decision to raise petrol price was appropriate and in the coming weeks it will be beneficial,” the minister said. “As part of the government, I stand behind every decision of the government and take full responsibility.”
Ismail said OGRA, the Oil and Gas Regulatory Authority, had sent a summary for the price hike to the prime minister, who had approved it.
The minister also spoke about the resumption of the IMF program, saying the fund was expected to hold its executive board meeting on August 29 and then resume the loan facility.
Pakistan has been struggling to get the program resumed, after it stalled earlier this year after the previous administration of ousted prime minister Imran Khan went against its terms and subsidized fuel and energy prices in the country.
Pakistan’s new government managed to secure a staff-level agreement for the resumption of the loan on July 13, though the deal requires the approval of the IMF executive board.
The finance minister said the IMF had sent its revised letter of intent, saying he would sign the document and send it back to the global lender later today, Tuesday.
“We are hoping that [the IMF] board meeting will be held in the month of August, probably on the 29th, after which the disbursement [of loan] will start,” he said. “You are aware that the [IMF] loan program has already resumed.”
The IMF resident chief in Pakistan, Esther Perez Ruiz, issued a statement earlier this month, saying the country had met all preconditions for the resumption of the loan program, though the executive board meeting would be held after Pakistan managed to secure “adequate financing assurances.”
The country’s acting governor of central bank has told the media the government was striving to bridge the external financing gap of $4 billion by reaching out to friendly countries, such as Saudi Arabia, Qatar, the United Arab Emirates and China.
Discussing the overall economic state of the country, Ismail said Pakistan’s national currency had started recovering its losses in recent weeks.
“The dollar went out of control on July 17 and started depreciating rapidly for several days, though it is now beginning to come back,” he said.
Ismail added the Pakistani rupee had remained the strongest global currency since the beginning of August and the country’s equity market had also displayed a bullish trend during the same period.
He attributed the appreciation of rupee to his decision of temporarily halting the import of luxury goods while praising local importers for cooperating with the government.
