Pakistan Scraps Cheap Fuel Plan; IMF Given Assurance

Web Desk — The Federal government, in an important development, assures the International Monetary Fund (IMF) that it would not implement the fuel subsidy plan. The assurance has been given as the two sides negotiate a pending $1.1 billion bailout package for the country.

According to Bloomberg News, the IMF pledged to continue negotiations with the government on the long-delayed loan despite political tensions in Pakistan.

Prime Minister Shehbaz Sharif proposed a fuel subsidy plan in March in order to give relief to the inflation-hit masses. By that plan, the government had to charge more from affluent consumers for fuel and less from people having bikes and vehicles up to 800cc.

Now, taking a U-turn, the government, according to the Bloomberg report, has given a commitment that it would not implement the fuel-subsidy plan in the current fiscal year and beyond.

The lender said that the government also would not introduce new tax exemptions and allow a market-based exchange rate for the rupee currency.

The development came a day after Petroleum Minister Musadik Malik vowed on behalf of the government to address IMF’s concerns before implementing its new fuel subsidy plan.

Meanwhile the IMF, in a scheduled press conference in Washington, said Pakistan needed significant additional financing to successfully complete the long-awaited ninth review of the IMF’s bailout package.

A staff-level agreement, if reached, would release the $1.1bn tranche out of a $6.5bn IMF bailout package. The same package has been delayed since November. Nearly 100 days have passed since the last staff-level mission to Pakistan. So far, this is the longest such gap since 2008.