ISLAMABAD: Pakistan has delayed its “petroleum relief” scheme it announced in March for low-income people until it addresses the International Monetary Fund’s (IMF) reservations about it, State Minister for Petroleum Dr. Musadik Malik said on Wednesday.
As surging fuel and energy prices in Pakistan pushed inflation to record highs, Prime Minister Shehbaz Sharif announced a petroleum relief scheme on March 19. According to the scheme, affluent motorists would be charged more for a subsidy of up to Rs50 per liter on petrol for low-income people.
Sharif said the scheme would be available for consumers who have motorcycles, rickshaws, 800cc, and “other small cars.”
However, days after the scheme was announced, IMF’s resident representative in Pakistan said the government did not consult it on the move. He said the IMF would seek “greater details” from Islamabad on its operation, cost, targeting, and other factors.
“We are trying because you saw the IMF expressed its reservations [on the petroleum relief scheme] and we realized we weren’t able to communicate the nature of this scheme to them,” Malik told Samaa TV.
The minister said that while the government is consistently working on the scheme, its implementation had been “temporarily” halted till Islamabad discusses the matter with the IMF and brings “everyone on board.”
With the prospect of default looming large in the wake of worrying economic indicators, Pakistan is desperately trying to revive a stalled $6.5 billion loan program with the IMF. Despite several rounds of talks between both sides, Islamabad and the international lender are yet to sign a staff-level agreement that would unlock $1.1 billion in funds for Pakistan.
Sharif’s move to announce the petroleum subsidy came after Islamabad hiked taxes, shifted to a market-based exchange rate, and increased fuel prices, all part of the tough conditionalities proposed by the IMF for the bailout package.
Pakistan’s currency has suffered massive devaluation against the US dollar over the past year while its reserves have dipped to historic lows. According to official data, inflation skyrocketed to 36.4 percent, the highest since 1964, making it difficult for low-income Pakistanis to make ends meet.
