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Pakistan

Govt will take fresh loan to pay for cut in petrol, electricity prices: Khaqan Abbasi

  • Former prime minister says decision will have an impact on Pakistan's economy
Updated 01 Mar, 2022

Former prime minister and PML-N's senior vice president Shahid Khaqan Abbasi said on Tuesday that the government will have to take a fresh loan to pay for the announced cut in petrol and electricity prices, adding that the decision will only add a burden on the country's economy.

"Two weeks ago, the government increased the prices of petrol by saying that oil prices were rising globally and that it had made promises with the International Monetary Fund (IMF)," he said while talking to reporters in Islamabad.

PM Imran announces industrial package with eyes on foreign exchange inflow

"Can the government explain how this price reduction will be paid and what are the reasons behind it?"

He added that it does not make sense that while international oil prices are rising, the government has announced a subsidy. "Have you left the IMF programme?" Abbasi inquired.

While explaining the government's alleged motive behind the move, he said that this was done because of the opposition's pressure to bring a no-confidence motion against Prime Minister Imran Khan.

"When the opposition talked about removing the prime minister, the government reduced prices," he said, adding that "this will have implications on Pakistan's economy".

‘Rs5 power tariff cut will be adjusted through budgetary reallocation’

On Monday, PM Imran announced a cut in petrol and electricity prices despite a steep rise in the global oil market, pledging to freeze the new rates until the next budget in June.

The move comes as Khan's opposition, already engaged in street protests over what they say is his mismanagement of the economy and rising inflation, says it is set to propose a no-confidence motion in parliament to oust him.

Petrol and diesel prices will be slashed by 10 rupees a litre and electricity rates will be cut by 5 rupees per unit, Khan said in a televised address to the nation.

The prices of both commodities have risen multiple times in the past year under directions from International Monetary Fund (IMF) as part of a reform agenda it agreed upon with Pakistan in 2019 and which is set to continue with a $6-billion rescue package.

"We have decided that we will not raise prices of these two things until the next budget," Khan said.

Khan's announcement also came as the price of Brent crude oil recently surpassed $100 a barrel in the global market.

Pakistan's economy has lately been under pressure due to a widening current account deficit and depleting foreign reserves.

Meanwhile, Minister for Energy, Hammad Azhar has said the reduction of electricity tariff by Rs 5 per unit will be adjusted through budgetary reallocation and will be circular debt flow neutral.

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