| High speed diesel to cost Rs204.15,

light diesel Rs178.31 per litre | Finance minister

says increase inevitable to revive IMF loan programme | Miftah says China has agreed to provide $2.3b commercial loan to Pakistan

ISLAMABAD   -  After a gap of one week, the coalition government on Thursday again dropped another petrol bomb on the people by increasing oil prices up to Rs30 per liter, which would fuel the inflation rate in the country.

Addressing a press conference here, Federal Minister for Finance and Revenue Miftah Ismail announced this massive increase. He said that petrol prices are further enhanced by Rs30 per liter to Rs209.86 per liter. High speed oil prices are increased by 30 per liter to Rs204.15 per liter and light diesel price to Rs178.31 per liter. However, kerosene oil prices are enhanced by Rs26.38 per liter to Rs181.94 per liter. He informed that the government would still bear Rs9 per liter subsidy on petrol, Rs23 per liter on high speed diesel and Rs8 per liter on light diesel oil.

This was the second massive hike in prices of petroleum products in the last few days. Earlier, on last Thursday, the government had increased oil prices by Rs30 per liter.

The Finance Minister admitted that inflation would increase following the decision of enhancing oil prices. However, he said that the government has no other option as prices of petroleum products are massively increasing in international market. He informed that enhancing oil prices was important to secure a loan from the the International Monetary Fund (IMF).  The government, he said, was giving Rs191 billion monthly subsidy on petrol and diesel, which is unaffordable for the government. He made it clear that the government would not let the country towards default.

The government has also announced to withdraw the tax amnesty scheme for the industrialists, which was introduced by the previous government of PTI. However, the government has withdrawn tax amnesty scheme after IMF had expressed serious concerns over it.

To a question about the appointment of Governor State Bank of Pakistan, Finance Minister said that he would consult with Prime Minister Shehbaz Sharif on it in next few days.

On the occasion, Miftah Ismail also announced that China has agreed to provide commercial loan of $2.3 billion to Pakistan, which would help in building the country’s foreign exchange reserves and strengthening the local currency against the US dollar.

“Good News: The terms and conditions for refinancing of RMB 15 billion deposit by Chinese banks (about US$ 2.3 billion) have been agreed. Inflow is expected shortly after some routine approvals from both sides. This will help shore up our foreign exchange reserves,” said Federal Minister for Finance and Revenue Miftah Ismail on Twitter.

At the press conference, the minister said that China has agreed to reduce the interest rate on loan by one percent to 1.5 percent.

The country desperately needs foreign inflow to build its foreign exchange reserves, which are depleting due to repayment against previous loans and financing of current account deficit. The reserves have fallen to below $10 billion, which are enough to cover around five to six week’s imports of the country. “During the week ended on 27 May 2022, SBP reserves decreased by US$ 366 million to US$ 9,722.9 million due to the external debt repayment,” said State Bank of Pakistan. The total liquid foreign reserves held by the country stood at US$ 15.771 billion as of 27-May-2022. Foreign reserves held by the State Bank of Pakistan are US$ 9.722 billion and net foreign reserves held by commercial banks are US$6.04 billion.

The Finance Minister once again criticized the previous government for increasing overall debt of the country, witnessing negative growth and massive increase in budget deficit. He said that prices of electricity would not increase for the current month of June.

The Minister has shared the details of the Prime Minister’s ‘cheap Diesel and cheap petrol programme’ to compensate weaker segments of the society from the hike in prices of petroleum products. Under the programme, the government will provide targeted subsidies of Rs2000 per month to 14 million families, who are living below the poverty line. Around 7.3 million recipients are already registered with Benazir Income Support Program (BISP) and if these are excluded there are 6.7 poor households having below 37 poverty score. This program will cost Rs28 billion in one month. He said the relief amount will also be incorporated in the upcoming budget.

Miftah Ismail said woman head of the family, whose household income is less than Rs40,000 per month, can register themselves for this program by sending their National Identity Card number at number 786. He said that government would provide flour at Rs40 per kilogram and sugar at Rs70 per kilogram at Utility Stores Corporation throughout the next fiscal year.