ISLAMABAD: The global lender; International Monetary Fund (IMF) has said that Pakistan did not consult the global lender on its petrol subsidy for the low-income groups.
The IMF’s resident representative for Pakistan, Esther Perez, told Bloomberg on Tuesday that the IMF was not consulted on the government’s scheme to raise fuel prices for wealthier vehicle-owners to finance a subsidy for lower-income groups.
“Fund staff are seeking greater details on the scheme in terms of its operation, cost, targeting, protections against fraud and abuse, and offsetting measures, and will carefully discuss these elements with the authorities,” said Perez.
On Monday, Pakistan’s Minister of State for Petroleum, Musadik Malik had announced that the government, in order to cushion the effect of high petrol prices on inflation-hit masses, has decided to subsidise petrol up to Rs100 for owners of vehicles up to 800cc and motorcyclists.
“Prime Minister Shehbaz Sharif has directed to provide subsidy on petrol to low-income groups up to Rs100 per litre,” Malik told mediamen in Lahore. Earlier, the government had decided to give a subsidy of Rs50 per litre. Malik said, under a comprehensive strategy, subsidised petrol will be available to owners of vehicles up to 800cc and motorcyclists. He further said that owners of vehicles above 800cc would be charged full price.
He further said the decision to provide fuel at the subsidised rates will be implemented within six weeks. As per the government scheme, rich will pay Rs100 more for petrol while the poor will pay Rs100 less.
Pakistan has made ‘substantial progress’: IMF
On the staff level agreement, the global lender said that Pakistan has made “substantial progress” in complying with the policy commitments needed to unlock loans amounting to billions of dollars. “A staff-level agreement will follow once the few remaining points are closed,” Perez told Bloomberg.
“Ensuring there is sufficient financing to support the authorities in the implementation of their policy agenda is the paramount priority.”
Last week, Pakistan’s Finance Minister Ishaq Dar had said that the IMF wanted to see countries finalise commitments they promised to help Pakistan shore up its funds before signing off on the bailout package. Pakistan required to repay about $3bn of debt by June, while $4bn is likely to be rolled over.
Pakistan has taken tough measures including increasing energy prices and taxes and also allowing its currency to weaken to restart a $6.5bn loan package from the IMF. The funds will offer some relief to Pakistan still reeling from the 2022 devastating floods and also help pull the economy out of a crisis ahead of elections this year.
