ISLAMABAD: Prime Minister Shehbaz Sharif said on Thursday that his government had no other choice but to increase the prices of petroleum products, blaming the hike in fuel prices on the predecessor government’s “worst ever deal” with the International Monetary Fund (IMF).
Pakistan increased the prices of petroleum products on Wednesday for the third time in a month, as the South Asian nation desperately seeks to revive a $6 billion loan programme with the International Monetary Fund (IMF) by removing subsidies from the oil and power sectors.
Pakistan entered into a three-year deal with the IMF in 2019. The Fund has been pushing Islamabad to roll back subsidies on the oil and power sectors, a move the government has been struggling with due to soaring inflation in the country. Talks between the IMF and the government ended inconclusively last month.
A pending tranche of $900 million from the Fund is contingent on a successful review by the IMF, after which Pakistan will be able to unlock funding from other multilateral donors. The South Asian country is in dire need of funding as its foreign reserves can cover just two months’ worth of imports.
PM Sharif said he is “acutely aware” of the impact that rising fuel prices have.
“Government is left with no choice but to raise the prices due to IMF deal that PTI govt signed,” the prime minister said, adding that he would soon take the nation into confidence on the specifics of the previous government’s deal with the Fund.
On Wednesday, Pakistan increased the price of petrol by Rs24.03 per liter, high-speed diesel by Rs59.16 per liter, kerosene oil by Rs29.49 per liter and light diesel oil by Rs29.16 per liter. After the latest hike, the price of petrol has increased to Rs233.89 per liter.
This is the third time the government has hiked the prices of petroleum products within a month.
In a separate tweet, PM Sharif took a dig at former prime minister Imran Khan’s government for striking the “worst ever deal” with the IMF. “How can they pretend to be innocent when what the nation is going through is clearly their doing?”
On Wednesday, ex-prime minister Imran Khan had lashed out at the government, saying that it could not pull the country out of its existing economic crisis. He warned that the situation would only worsen in the days to come.
The Finance Division had said on Wednesday it was increasing the prices of petroleum products due to rising prices of petroleum products in the international market and exchange rate fluctuations.
“Maintaining the fuel prices at the subsidized rate is constantly increasing the fiscal deficit and current account gap besides putting pressure on country's foreign exchange reserves,” the Finance Division said.
