Government raises petroleum prices to strike deal with IMF

Federal Minister for Finance and Revenue Miftah Ismail on Thursday announced increase in petroleum products in line with the agreement signed by the previous government with the International Monetary Fund (IMF).

Addressing a press conference, the minister said it was an inevitable decision as the government was also bearing loss of around Rs 91 billion due to provision of subsidy on the petroleum products as per the rates of May 31. As the oil prices had further increased in the international market since May 31, the loss would mount to around Rs 130 billion and put further burden on the national exchequer.

“I understand that it will further raise inflation, but I want to inform the people that it was inevitable as the government has to make an agreement with the IMF.”

The decisions / steps agreed by former finance minister Shaukat Tarin while striking the deal with IMF and later violating the same had tied the hands of incumbent government, Miftah Ismail said.

The minister announced hike of Rs 30 per liter in the price of petrol, which would now be sold at Rs 209.86 instead of Rs 179.86 from June 3. Likewise, the per liter price of diesel had been enhanced by Rs 30 from Rs 174.15 to Rs 204.15; light diesel oil by Rs 30 from Rs 148.31 to Rs.178.30, and kerosene oil by Rs 26.38 from Rs.155.56 to Rs.181.94.

Despite the price hike, he said, the government was still bearing loss of Rs 9 at per liter petrol, Rs 23 on high speed diesel and Rs 8 at light diesel oil. However, there was no loss on the kerosene oil.

The minister said the hike in petroleum products’ prices would definitely increase inflation, however, the government had taken measures to reduce its negative impacts on the poor people by providing a relief package.

The government, he said, would provide sugar at Rs 70 per kilogram and flour at Rs 40 per kg throughout the year, which would help provide relief to the poor people. The government was already providing subsidy on ghee, rice and pulses, he added.

The minister said China agreed to again give $2.35 billion loan to Pakistan at one percent markup rate, which was less than the previous one.

“We are launching Sasta Petrol and Sasta Diesel cards for those persons, who are earning less than Rs 40,000 per month. They will be able to avail Rs 2,000 per month. This amount will be given to the BISP beneficiaries as well.”

Miftah said that government would continue subsidy on wheat and sugar through the Utility Stores.