Wednesday June 12, 2024

Petrol subsidy: Pakistan 'determined' to address IMF concerns

Petroleum minister admits IMF had some reservations about govt’s plan to provide fuel subsidy

By Business Desk
May 09, 2023

Pakistan aims to address the International Monetary Fund’s (IMF) concerns about a proposed fuel subsidy plan prior to its implementation, in a bid to revive a stalled loan programme that is crucial for the country’s economic stability, Bloomberg reported Tuesday. 

The international lender had some reservations about the government’s plan to raise fuel prices for wealthier people to finance a subsidy for lower-income people — a plan that aims to help protect the poor and vulnerable, Minister of State for Petroleum Dr Musadik Malik admitted.

Malik said: “We want to make sure now that if we move forward, we take care of their concerns and make sure that they completely understand what we are trying to do and why."

The government is still trying to meet IMF conditions to revive a stalled $6.5 billion bailout package, key to avoiding a default. The government has raised taxes and energy prices and allowed the currency to depreciate to meet some of them.

This is not the first time petrol price subsidies have been a sticking point for the IMF, as measures by the previous Imran Khan-led government stalled the programme last year.

Last month, Finance Minister Ishaq Dar said that the fuel subsidy plans had been shared with the fund.

However, there is still no sign of Pakistan reaching the staff-level agreement with the IMF any time soon.