- Finance Minister Miftah Ismail says decision taken due to rising prices of petroleum products in international market
- After increase, petrol hits Rs209.86 per litre
Finance Minister Miftah Ismail announced on Thursday another hike in the prices of petroleum products after the International Monetary Fund (IMF) emphasised the termination of subsidies to revive the bailout programme.
In a press conference, the finance minister explained that the decision was taken due to the rising prices of petroleum products in the international market.
The minister said that despite the massive increase, the government was still bearing losses.
"The government is still facing a loss of around Rs9 in petrol despite a hike of Rs30 as we are not collecting any tax on the fuel," the minister said.
After the increase, the new prices are as follows (change to take effect from June 3):
Petrol – hike of Rs30 – new price Rs209.86
Diesel – hike of Rs30 – new price Rs204.15
Kerosene oil - hike of Rs26.38 - new price Rs181.94
Light diesel - hike of Rs30 - new price Rs178.31
The latest massive price hike comes a week after the government had increased fuel prices to meet a key condition set by the International Monetary Fund (IMF) for revival of its bailout programme.
On May 25, the IMF mission concluded its talks with Pakistan authorities without a word on reviving the stalled Extended Fund Facility (EFF).
In its statement, the IMF mission had said deviations from the policies agreed in the last review, partly reflecting the fuel and power subsidies announced by the authorities in February, required concrete policy actions, including in the context of removing fuel and energy subsidies and the FY2023 budget, to achieve programme objectives.
"The mission has held highly constructive discussions with the Pakistani authorities aimed at reaching an agreement on policies and reforms that would lead to the conclusion of the pending seventh review of the authorities’ reform program, which is supported by an IMF EFF arrangement," said the IMF in its statement at the conclusion of talks.
Inconclusive talks have prompted the government to remove subsidies announced on fuel and energy with the latest price-hike in petroleum products another step in showing commitment to reviving the IMF programme.
The EFF has been deemed crucial for Pakistan's economy as it will pave way for the release of a $900-million tranche as well as lending from other sources. Foreign exchange inflow is important for the economy that has seen its reserves hit a critical level.