The government of Pakistan stated on Thursday that the price of petroleum products will be increased by Rs30 in accordance with the International Monetary Fund’s (IMF) stipulations for the removal of commodity subsidies.
The decision, announced by Finance Minister Miftah Ismail during a news conference on Thursday, is critical for Pakistan to reactivate the Fund’s programme for Pakistan in order to resuscitate the country’s struggling economy.
The finance minister acknowledged that part of the cost had been passed to the people, but despite the significant rise in the price of petroleum goods, the government was still losing money.
A day earlier, Pakistan and the IMF were unable to achieve a staff-level agreement after the Fund stated that there were departures from the policies agreed upon by both parties.
The PTI-led government first agreed to the IMF’s demand to raise the prices of power and petroleum goods, but later in March, former Prime Minister Imran Khan announced subsidies on both commodities – an agreement that the present administration is continuing.
The finance minister stated that the move to raise prices would provide financial markets stability, the rupee would strengthen, and the economy would benefit.
In answer to a query, Ismail stated that inflation will undoubtedly rise owing to an increase in the price of petroleum goods. “But tell me, what other options did we have other taking this step?”
Ismail said Khan, in violation of the IMF agreement, announced petroleum product subsidies as his government’s tenure came to an end.
“We are all citizens of a country. How can we afford [such subsidies] that cost three times as much as operating the government’s day-to-day operations? “asked the finance minister.
According to Ismail, the fact that those who own automobiles, industries, and generators receive subsidies is an unfairness to the lower-income sector of society.
“Indeed, it is the government’s failing that inflation is growing […] but we have offered subsidies on goods at utility stores and are making sugar more affordable than Imran Khan’s government,” he remarked.
Ismail stated that raising the price of petroleum goods by Rs30 was not an easy choice for Prime Minister Shehbaz Sharif, but assured that the current administration will take measures to protect the economy.
“Khawaja Asif sahab, in today’s conversations, underlined that it would not be a prudent move to [destroy] the state and save our politics,” Ismail remarked, quoting Defence Minister Khawaja Asif.
The finance minister emphasised that the existing government will propose the fiscal budget for FY2022-2023 and ruled out the establishment of a caretaker government, saying that the current administration would finish its term.