Pakistan Rejects IMF Proposal To Increase Petroleum Prices

Web Desk — Going against the International Monetary Fund (IMF) recommendations, Pakistan says it will maintain subsidies to keep fuel and power prices steady for consumers as the country seeks to boost its rescue package with the fund.

According to IMF, Pakistan had agreed to roll back unfunded subsidies to the oil and power sectors ahead of the resumption next month of a review of the $6 billion package signed in July 2019.

But Prime Minister Shehbaz Sharif rejected the proposal to raise the prices of petroleum products to give relief to the consumers, a finance ministry statement said.

The petroleum prices are reviewed every two weeks.

From April to June, Pakistan is set to give more than $2 billion in subsidies to the oil and power sectors which was announced by ousted Prime Minister Imran Khan during his last days in power.

Fuel and electricity prices have been the subject of public pressure amid double-digit inflation.

An IMF mission is due to arrive in Pakistan in May to resume discussions over policies for completing the seventh review of the country’s Extended Fund Facility (EFF), which Islamabad has asked the IMF to increase the size and duration of.

Pakistan will get more than $900 million, which would in turn unlock additional external funding if the IMF review is cleared.

Pakistan is in dire need of external finances due to a widening current account deficit and foreign reserves falling as low as $10.5 billion, equivalent to less than two months of imports.