Petrol price reaches Rs179.86 per litre, high speed diesel at Rs174.15, light diesel oil at Rs148.31 and kerosene oil at Rs155.56 per litre

 

ISLAMABAD   -   The coalition government on Thursday finally took a tough decision to increase petroleum products prices by Rs30 per litre in order to reduce the subsidies to secure next tranche from the International Monetary Fund (IMF).

Federal Minister for Finance and Revenue Miftah Ismail announced to increase the oil prices on the next day after talks with the IMF remained inconclusive over the issue of giving massive subsidy on oil products and electricity.

At a press conference, he explained that the decision was taken in order to ensure the revival of the IMF programme. He said that the government is increasing the oil prices by Rs30 per litre. The petrol price would increase to Rs179.86 per litre following the new increase. Meanwhile, high speed diesel price would jump to Rs174.15 per litre, light diesel oil to Rs148.31 per litre and kerosene oil price to Rs155.56 per litre.

The oil prices were kept unchanged from March 2022 despite massive increase in prices in international market. Former Prime Minister Imran Khan had announced to keep oil prices fixed from March to June by giving massive subsidy. Later, the new coalition government has also followed the previous government policy to keep oil prices unchanged. However, the IMF has expressed serious concerns over the decision and refused to revive loan programme without withdrawing subsidy.

The coalition government has finally taken the tough decision to enhance the prices. The decision would help in reaching staff level agreement with the IMF paving way for releasing tranche of around one billion dollars. He informed that despite increasing the prices, the government would still bear the loss. Miftah noted that financial market would be stable, rupee value would improve and economy would get a boost following the decision to increase oil prices.

He admitted that inflation would increase due to enhancing prices. However, the government has no other option than to increase prices following massive hike in prices in international market. “But tell me, what option we had instead of taking this step.”

Miftah Ismail said that former Prime Minister Imran Khan had gone against IMF by announcing subsidy on oil products when his government’s tenure was coming to an end. “We are all the owners of a country. How can we afford [such subsidies] that are costing three times more than running the everyday affairs of the governments,” the finance minister said.

Miftah Ismail said it was an injustice to the lower-income segment of the society that the people who own cars, industries, and generators, are getting subsidies.

“Indeed, this is the failure of the government that inflation is rising [...] but we have provided subsidies on commodities at utility stores and are making sugar available at a lesser cost than Imran Khan’s government,” he said.

Ismail said increasing the price of petroleum products by Rs30 was not an easy decision for Prime Minister Shehbaz Sharif, but vowed that the incumbent government would take steps to safeguard the economy.

He stressed that the present government would present the fiscal budget for FY2022-2023. He also ruled out the formation of a caretaker government, noting that the current setup would complete its tenure.

Meanwhile, Despite the talks between Pakistan and International Monetary Fund (IMF) ended inconclusive, Federal Minister for Finance and Revenue Miftah Ismail on Thursday said that the incumbent government is committed to reviving the IMF programme and putting Pakistan back on a sustainable growth path.

The Pakistan-IMF talks ended inconclusively on Wednesday in Doha, Qatar, as the Fund made it clear to withdraw subsidy on petroleum products and electricity before reviving the stalled loan programme. “The team emphasized on the urgency of concrete policy actions, including in the context of removing fuel and energy subsidies and the FY2023 budget, to achieve program objectives,” said IMF in a statement.

An official of the ministry of finance informed that all other issues have been settled with the IMF apart from increasing oil and power prices. “The IMF will release loan tranche once the government withdraws subsidies,” he said. He further said that the incumbent government would discuss the issue of withdrawing subsidy with its allied parties in next few days.

The federal minister for finance and revenue also issued his statement on the recently concluded talks with the IMF on twitter. “I have just returned from Doha after talks with the IMF. Our delegation had very useful and constructive discussions with the IMF team last week. We discussed significant slippages in FY 22, caused in part by the fuel subsidies given in February 2022,” said Miftah Ismail.

The government, he said, has also discussed targets in the budget for the next fiscal year (FY 23). “Where, in light of high inflation, declining forex reserves and a large current account deficit we would need to have a tight monetary policy and consolidate our fiscal position. Thus the govt is committed to reducing the budget deficit in FY23”. The IMF team emphasised the importance of rolling back fuel & power subsidies, which were given by the previous administration in contravention of its own agreement with the Fund, he added.

“The government is committed to reviving the IMF programme & putting Pakistan back on a sustainable growth path,” the Finance Minister concluded.

The ministry has also issued a statement on the Pakistan-IMF talks. Pakistan’s team led by Finance Minister Miftah Ismail held a final meeting with the IMF Mission at Doha on the seventh review. The week-long consultations reviewed fiscal and monetary situation for FY 2022 and proposed measures for FY2023. The IMF expressed concern over the fiscal and current account situation arising from government’s actions especially electricity and fuel subsidies and other slippages.

The meetings identified areas of divergence and corrections required in the current account and fiscal deficit. Mr Nathan Porter, IMF’s Mission Chief, also issued a statement on conclusion of the meetings.

The IMF team emphasized the importance of rolling back fuel and power subsidies, which were given by the previous administration in contravention of its own agreement with the Fund. The government is committed to reducing the overall budget deficit in FY23.

The government remains committed to reviving the IMF programme and put Pakistan back on a sustainable growth path, the ministry of finance added.