Pakistani and IMF officials are now holding talks in a virtual setting to finalize a deal. file | Photo Credit: Reuters
People in Pakistan woke up to the shock of a historic price hike in petrol and gas prices on February 16, as the government tried to appease the IMF to unlock a crucial loan tranche for the cash-strapped country.
The price hike, called a “petrol bomb” these days, was dropped around midnight on Wednesday after the government presented a tax-laden ‘mini-budget’ in parliament to extract 170 billion rupees from the people through new taxes. Hours later, further increase in electricity and gas prices.
Petrol price was increased by Rs 272 per liter after an increase of Rs 22.20, a press release from the Finance Department read on Wednesday night, noting that the increase was due to the devaluation of the rupee against the dollar.
High-speed diesel (HSD) price has been increased by Rs 17.20, kerosene by Rs 12.90 and light diesel oil (LDO) by Rs 9.68. The new price of HSD will be Rs 280 per litre. Kerosene will be sold at Rs 202.73 while LDO will be sold at Rs 196.68 per litre.
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“The increase in price is due to the devaluation of the Pakistani rupee, which is applicable for the calculation of the current pricing period,” the press release said, adding that the prices will be effective from February 16.
The increase came after Finance Minister Ishaq Dar introduced a money bill in Parliament to meet the International Monetary Fund’s (IMF) demand to raise revenue before releasing $1.1 billion out of $7 billion in loans.
The rise in the price of petroleum products was one of the Washington-based lender’s preconditions, which along with the new fiscal measures taken through the ‘mini-budget’ will lead to an increase in already record-high inflation.
Petrol is used by motorbikes and cars and is an alternative to compressed natural gas.
The gas is already not available at CNG stations to feed the transport due to the problem of its availability during the winter season.
Kerosene oil is used in remote areas where liquefied petroleum gas is not available for cooking. The Pakistan Army is a major user of it in the northern parts of Pakistan.
Pakistan grapples with instability stemming from last summer’s economic crisis devastating floodand the recent boom Terrorist attacks across the country.
Pakistan and IMF officials held marathon talks for 10 days in Islamabad, from January 31 to February 9, but could not reach a deal as the fund sought prior action before signing any agreement to release $1.1 billion of the $7 billion deal agreed in 2019 It was
Pakistani and IMF officials have been holding talks this month in virtual settings to finalize a deal to provide much-needed funds to ease the foreign exchange shortfall below $3 billion.